##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q



|(Mark One)
|----------
|x         

For the quarterly period ended September 30, 2003

OR

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to

Commission file number 000-31511

AT ROAD, INC.

(Exact name of registrant as specified in its charter)


|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization) |  | 94-3209170
(I.R.S. Employer
Identification No.)

47200 Bayside Parkway
Fremont, CA 94538
(Address of principal executive offices, including zip code)

510-668-1638
(Registrants telephone number, including area code)

| |                                                                                                                                                                                                                                                                                                                                                          | 
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes x            No o

| |                                                                                                                       | 
| | --------------------------------------------------------------------------------------------------------------------- | 
| | Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes x            No o

| |                                                                                                   | 
| | ------------------------------------------------------------------------------------------------- | 
| | As of
November 3, 2003 there were 53,559,091 shares of the registrants Common
Stock outstanding.



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TABLE OF CONTENTS



|                              |                                                                                               |                                                           |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | Item 1. Financial Statements                                                                 
|                              |                                                                                               | Condensed Consolidated Balance Sheets                    
|                              |                                                                                               | Condensed Consolidated Statements of Operations          
|                              |                                                                                               | Condensed Consolidated Statements of Stockholders Equity
|                              |                                                                                               | Condensed Consolidated Statement of Cash Flows           
|                              |                                                                                               | Notes To Condensed Consolidated Financial Statements     
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                              | Item 4. Controls and Procedures                                                              
|PART II. OTHER INFORMATION   
|                              | Item 1. Legal Proceedings                                                                    
|                              | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                              | Item 5. Other Information                                                                    
|                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|EXHIBIT 31.1                 
|EXHIBIT 31.2                 
|EXHIBIT 32.1                 
|EXHIBIT 32.2                 



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##### Table of Contents



INDEX

|         |  |                                                                                                                                                             
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|PART I.  |  | FINANCIAL INFORMATION                                                                                                                                       
|         |  | Item 1. Financial Statements.                                                                                                                               
|         |  | Condensed Consolidated Balance Sheets as of September 30, 2003 and December 31, 2002.                                                                       
|         |  | Condensed Consolidated Statements of Operations for the three and nine months ended
September 30, 2003 and 2002.                                            
|         |  | Condensed Consolidated Statements of Stockholders Equity for the nine months ended
September 30, 2003 and 2002 and the nine months ended
December 31, 2002.
|         |  | Condensed Consolidated Statements of Cash Flows for the nine months ended September 30,
2003 and 2002.                                                      
|         |  | Notes to Condensed Consolidated Financial Statements.                                                                                                       
|         |  | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.                                                              
|         |  | Item 3. Quantitative and Qualitative Disclosures About Market Risk.                                                                                         
|         |  | Item 4. Controls and Procedures.                                                                                                                            
|PART II. |  | OTHER INFORMATION                                                                                                                                           
|         |  | Item 1. Legal Proceedings.                                                                                                                                  
|         |  | Item 4. Submission of Matters to a Vote of Security Holders.                                                                                                
|         |  | Item 5. Other Information.                                                                                                                                  
|         |  | Item 6. Exhibits and Reports on Form 8-K.                                                                                                                   

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##### Table of Contents






PART I. FINANCIAL INFORMATION







Item 1. Financial Statements.

At Road, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and par value amounts)
(unaudited)

|                                                     |                                                                                                                                                                     |                                      |        |                                            |   |               |         |              |   |   |        | 
|---------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------ | ------------------------------------------ | - | ------------- | ------- | ------------ | - | - | ------ | 
|                                                     |                                                                                                                                                                     |                                      |        |                                            |   | September 30, |         | December 31,
|                                                     |                                                                                                                                                                     |                                      |        |                                            |   | 2003          |         | 2002        
|                                                     |                                                                                                                                                                     |                                      |        |                                            |   |               |         |             
|                                                     |                                                                                                                                                                     |                                      | ASSETS |                                            |   |               |         |              |   |   |       
|Current assets:                                      |                                                                                                                                                                     |                                      |        |                                            |   |               |         |             
|                                                     | Cash and cash equivalents                                                                                                                                           |                                      | $      | 98,395                                     |   |               | $       | 35,659       |  
|                                                     | Restricted short-term investments                                                                                                                                   |                                      |        | 2,000                                      |   |               |         | 2,241        |  
|                                                     | Accounts receivable, net                                                                                                                                            |                                      |        | 6,848                                      |   |               |         | 7,407        |  
|                                                     | Inventories                                                                                                                                                         |                                      |        | 2,330                                      |   |               |         | 5,399        |  
|                                                     | Deferred product costs and other current assets                                                                                                                     |                                      |        | 12,538                                     |   |               |         | 9,937        |  
|                                                     |                                                                                                                                                                     |                                      |        |                                            |   |               |         |             
|                                                     |                                                                                                                                                                     |                                      |        | Total current assets                       |   |               | 122,111 |              |   |   | 60,643 | 
|Property and equipment, net                          |                                                                                                                                                                     |                                      | 2,171  |                                            |   |               | 2,500   |             
|Deferred product costs, intangibles and other assets |                                                                                                                                                                     |                                      | 7,552  |                                            |   |               | 7,407   |             
|                                                     |                                                                                                                                                                     |                                      |        |                                            |   |               |         |             
|                                                     |                                                                                                                                                                     |                                      |        | Total assets                               |   | $             | 131,834 |              |   | $ | 70,550 | 
|                                                     |                                                                                                                                                                     |                                      |        |                                            |   |               |         |              |  
|                                                     |                                                                                                                                                                     | LIABILITIES AND STOCKHOLDERS EQUITY |        |                                            |   |               |         |              |   |  
|Current liabilities:                                 |                                                                                                                                                                     |                                      |        |                                            |   |               |         |             
|                                                     | Accounts payable                                                                                                                                                    |                                      | $      | 2,415                                      |   |               | $       | 3,408        |  
|                                                     | Accrued liabilities                                                                                                                                                 |                                      |        | 5,138                                      |   |               |         | 3,870        |  
|                                                     | Deferred revenue and customer deposits                                                                                                                              |                                      |        | 9,214                                      |   |               |         | 7,594        |  
|                                                     |                                                                                                                                                                     |                                      |        |                                            |   |               |         |             
|                                                     |                                                                                                                                                                     |                                      |        | Total current liabilities                  |   |               | 16,767  |              |   |   | 14,872 | 
|Deferred revenue                                     |                                                                                                                                                                     |                                      | 6,780  |                                            |   |               | 5,321   |             
|Other long-term liabilities                          |                                                                                                                                                                     |                                      | 74     |                                            |   |               | 190     |             
|                                                     |                                                                                                                                                                     |                                      |        |                                            |   |               |         |             
|                                                     |                                                                                                                                                                     |                                      |        | Total liabilities                          |   |               | 23,621  |              |   |   | 20,383 | 
|Stockholders equity:                                |                                                                                                                                                                     |                                      |        |                                            |   |               |         |             
|                                                     | Preferred stock, $0.0001 par value, 10,000,000 shares
authorized, shares issued and outstanding: none at
September 30, 2003 and December 31, 2002                   |                                      |        |                                           |   |               |         |             |  
|                                                     | Common stock, $0.0001 par value, 250,000,000 shares
authorized, shares issued and outstanding: 53,219,785 at
September 30, 2003 and 47,747,156 at December 31, 2002 |                                      |        | 226,649                                    |   |               |         | 170,610      |  
|                                                     | Deferred stock compensation                                                                                                                                         |                                      |        | (30                                        | ) |               |         | (491         | )
|                                                     | Notes receivable from stockholders                                                                                                                                  |                                      |        | (87                                        | ) |               |         | (2,068       | )
|                                                     | Accumulated deficit                                                                                                                                                 |                                      |        | (118,319                                   | ) |               |         | (117,884     | )
|                                                     |                                                                                                                                                                     |                                      |        |                                            |   |               |         |             
|                                                     |                                                                                                                                                                     |                                      |        | Total stockholders equity                 |   |               | 108,213 |              |   |   | 50,167 | 
|                                                     |                                                                                                                                                                     |                                      |        |                                            |   |               |         |             
|                                                     |                                                                                                                                                                     |                                      |        | Total liabilities and stockholders equity |   | $             | 131,834 |              |   | $ | 70,550 | 
|                                                     |                                                                                                                                                                     |                                      |        |                                            |   |               |         |              |  

See notes to condensed consolidated financial statements.

- 3 -



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At Road, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)

|                                                        |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |        |        |     |     | 
|------------------------------------------------------- | --------------------------------------------------------------------------- | --------------------------------- | -------------------------- | ------ | ------ | ------------------ | ------ | ----------------- | ------ | ---- | ---- | ------ | ------ | --- | ------- | ------ | ------ | --- | --- | 
|                                                        |                                                                             |                                   |                            |        |        | Three
Months Ended |        | Nine
Months Ended
|                                                        |                                                                             |                                   |                            |        |        | September 30,      |        | September 30,    
|                                                        |                                                                             |                                   |                            |        |        |                    |        |                  
|                                                        |                                                                             |                                   |                            |        |        | 2003               |        | 2002              |        | 2003 |      | 2002  
|                                                        |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |       
|Revenues:                                               |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |       
|                                                        | Service                                                                     |                                   | $                          | 13,113 |        |                    | $      | 8,657             |        |      | $    | 35,851 |        |     | $       | 23,865 |       
|                                                        | Product                                                                     |                                   |                            | 3,503  |        |                    |        | 2,659             |        |      |      | 10,275 |        |     |         | 7,609  |       
|                                                        |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |       
|                                                        |                                                                             | Total revenues                    |                            |        | 16,616 |                    |        |                   | 11,316 |      |      |        | 46,126 |     |         |        | 31,474 |    
|                                                        |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |       
|Costs and expenses:                                     |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |       
|                                                        | Cost of service revenue (excluding intangibles
amortization included below) |                                   |                            | 3,782  |        |                    |        | 3,440             |        |      |      | 11,840 |        |     |         | 9,974  |       
|                                                        | Cost of product revenue                                                     |                                   |                            | 5,249  |        |                    |        | 4,265             |        |      |      | 15,078 |        |     |         | 12,015 |       
|                                                        | Intangibles amortization                                                    |                                   |                            | 11     |        |                    |        | 418               |        |      |      | 445    |        |     |         | 1,246  |       
|                                                        | Sales and marketing                                                         |                                   |                            | 2,907  |        |                    |        | 2,433             |        |      |      | 8,344  |        |     |         | 8,035  |       
|                                                        | Research and development                                                    |                                   |                            | 1,386  |        |                    |        | 1,476             |        |      |      | 4,019  |        |     |         | 4,538  |       
|                                                        | General and administrative                                                  |                                   |                            | 2,189  |        |                    |        | 1,873             |        |      |      | 6,847  |        |     |         | 6,705  |       
|                                                        | Stock compensation(*)                                                       |                                   |                            | 154    |        |                    |        | 380               |        |      |      | 441    |        |     |         | 817    |       
|                                                        |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |       
|                                                        |                                                                             | Total costs and expenses          |                            |        | 15,678 |                    |        |                   | 14,285 |      |      |        | 47,014 |     |         |        | 43,330 |    
|                                                        |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |       
|Profit (loss) from operations                           |                                                                             |                                   | 938                        |        |        |                    | (2,969 | )                 |        |      | (888 | )      |        |     | (11,856 | )     
|                                                        |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |       
|Other income (expense), net:                            |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |       
|                                                        | Interest income, net                                                        |                                   |                            | 151    |        |                    |        | 202               |        |      |      | 436    |        |     |         | 656    |       
|                                                        | Investment impairment charge                                                |                                   |                            |       |        |                    |        |                  |        |      |      |       |        |     |         | (1,035 | )     
|                                                        | Other income (expense), net                                                 |                                   |                            | 6      |        |                    |        | 4                 |        |      |      | 17     |        |     |         | 15     |       
|                                                        |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |       
|                                                        |                                                                             | Total other income (expense), net |                            |        | 157    |                    |        |                   | 206    |      |      |        | 453    |     |         |        | (364   | )  
|                                                        |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |       
|Net income (loss)                                       |                                                                             | $                                 | 1,095                      |        |        | $                  | (2,763 | )                 |        | $    | (435 | )      |        | $   | (12,220 | )     
|                                                        |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |        |       
|Basic net income (loss) per share:                      |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |       
|                                                        | Basic                                                                       |                                   | $                          | 0.02   |        |                    | $      | (0.06             | )      |      | $    | (0.01  | )      |     | $       | (0.27  | )     
|                                                        |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |        |       
|                                                        | Diluted                                                                     |                                   | $                          | 0.02   |        |                    | $      | (0.06             | )      |      | $    | (0.01  | )      |     | $       | (0.27  | )     
|                                                        |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |        |       
|Shares used in calculating net income (loss) per share: |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |       
|                                                        | Basic                                                                       |                                   |                            | 50,689 |        |                    |        | 46,355            |        |      |      | 48,821 |        |     |         | 45,849 |       
|                                                        |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |        |       
|                                                        | Diluted                                                                     |                                   |                            | 55,813 |        |                    |        | 46,355            |        |      |      | 48,821 |        |     |         | 45,849 |       
|                                                        |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |        |       
|(*)Stock compensation:                                  |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |       
|                                                        |                                                                             |                                   | Cost of service revenue    |        | $      | 2                  |        |                   | $      | 7    |      |        | $      | 9   |         |        | $      | 18  |    
|                                                        |                                                                             |                                   | Cost of product revenue    |        |        | 11                 |        |                   |        | 25   |      |        |        | 25  |         |        |        | 81  |    
|                                                        |                                                                             |                                   | Sales and marketing        |        |        | 13                 |        |                   |        | 36   |      |        |        | 23  |         |        |        | 52  |    
|                                                        |                                                                             |                                   | Research and development   |        |        | 36                 |        |                   |        | 83   |      |        |        | 86  |         |        |        | 274 |    
|                                                        |                                                                             |                                   | General and administrative |        |        | 92                 |        |                   |        | 229  |      |        |        | 298 |         |        |        | 392 |    
|                                                        |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |        |       
|                                                        |                                                                             |                                   |                            | Total  |        | $                  | 154    |                   |        | $    | 380  |        |        | $   | 441     |        |        | $   | 817 | 
|                                                        |                                                                             |                                   |                            |        |        |                    |        |                   |        |      |      |        |        |     |         |        |       

See notes to condensed consolidated financial statements.

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##### Table of Contents






At Road, Inc.
Condensed Consolidated Statements of Stockholders
Equity
For the nine months ended September 30, 2003 and 2002
and the three months ended December 31, 2002
(In thousands, except share amounts)
(unaudited)

|                                                                          |  |              |            |          |  |                  |         |               |  |               |        |               |  |        |        |   |  |             |   |  |  |   |          |   |  |   |         |  
|------------------------------------------------------------------------- |  | ------------ | ---------- | -------- |  | ---------------- | ------- | ------------- |  | ------------- | ------ | ------------- |  | ------ | ------ | - |  | ----------- | - |  |  | - | -------- | - |  | - | ------- | -
|                                                                          |  |              |            |          |  |                  |         |               |  |               |        |               |  |        |        |   |  | Accumulated |   |  |  |   |          |   |  |  
|                                                                          |  | Common Stock |            | Deferred |  | Notes Receivable |         | Other         |  |               |        |               |  |        |        |  
|                                                                          |  |              |            | Stock    |  | From             |         | Comprehensive |  | Accumulated   |        | Stockholders
|                                                                          |  | Shares       |            | Amount   |  | Compensation     |         | Stockholders  |  | Income (Loss) |        | Deficit       |  | Equity
|                                                                          |  |              |            |          |  |                  |         |               |  |               |        |               |  |       
|BALANCES, January 1, 2002                                                 |  |              | 46,499,451 |          |  | $                | 169,148 |               |  | $             | (2,342 | )             |  | $      | (2,748 | ) |  | $           |  |  |  | $ | (103,647 | ) |  | $ | 60,411  |  
|Net loss                                                                  |  |              |            |          |  |                  |         |               |  |               |        |               |  |        |        |   |  |             |   |  |  |   | (12,220  | ) |  |   | (12,220 | )
|Shares issued under
employee stock purchase
plan                          |  |              | 259,725    |          |  |                  | 508     |               |  |               |        |               |  |        |        |   |  |             |   |  |  |   |          |   |  |   | 508     |  
|Exercise of stock options                                                 |  |              | 529,966    |          |  |                  | 660     |               |  |               |        |               |  |        |        |   |  |             |   |  |  |   |          |   |  |   | 660     |  
|Collection of notes
receivable from
stockholders                          |  |              |            |          |  |                  |         |               |  |               |        |               |  |        | 554    |   |  |             |   |  |  |   |          |   |  |   | 554     |  
|Repurchase of unvested
options exercised                                  |  |              | (93,750    | )        |  |                  | (126    | )             |  |               |        |               |  |        | 126    |   |  |             |   |  |  |   |          |   |  |   |        |  
|Deferred stock compensation                                               |  |              |            |          |  |                  | 17      |               |  |               | (17    | )             |  |        |        |   |  |             |   |  |  |   |          |   |  |   |        |  
|Reversal of deferred stock
compensation due to
employee terminations      |  |              |            |          |  |                  | (795    | )             |  |               | 795    |               |  |        |        |   |  |             |   |  |  |   |          |   |  |   |        |  
|Amortization of deferred
stock compensation                               |  |              |           |          |  |                  |        |               |  |               | 817    |               |  |        |       |   |  |             |  |  |  |   |         |   |  |   | 817     |  
|                                                                          |  |              |            |          |  |                  |         |               |  |               |        |               |  |        |        |   |  |             |   |  |  |   |          |   |  |   |         |  
|BALANCES, September 30, 2002                                              |  |              | 47,195,392 |          |  |                  | 169,412 |               |  |               | (747   | )             |  |        | (2,068 | ) |  |             |  |  |  |   | (115,867 | ) |  |   | 50,730  |  
|Net loss                                                                  |  |              |            |          |  |                  |         |               |  |               |        |               |  |        |        |   |  |             |   |  |  |   | (2,017   | ) |  |   | (2,017  | )
|Shares issued under the
employee stock purchase
plan                      |  |              | 293,676    |          |  |                  | 590     |               |  |               |        |               |  |        |        |   |  |             |   |  |  |   |          |   |  |   | 590     |  
|Exercise of stock options                                                 |  |              | 258,088    |          |  |                  | 616     |               |  |               |        |               |  |        |        |   |  |             |   |  |  |   |          |   |  |   | 616     |  
|Deferred stock compensation                                               |  |              |            |          |  |                  | (2      | )             |  |               | 2      |               |  |        |        |   |  |             |   |  |  |   |          |   |  |   |        |  
|Reversal of deferred stock
compensation due to
employee terminations      |  |              |            |          |  |                  | (6      | )             |  |               | 6      |               |  |        |        |   |  |             |   |  |  |   |          |   |  |   |        |  
|Amortization of deferred
stock compensation                               |  |              |           |          |  |                  |        |               |  |               | 248    |               |  |        |       |   |  |             |  |  |  |   |         |   |  |   | 248     |  
|                                                                          |  |              |            |          |  |                  |         |               |  |               |        |               |  |        |        |   |  |             |   |  |  |   |          |   |  |   |         |  
|BALANCES, December 31, 2002                                               |  |              | 47,747,156 |          |  |                  | 170,610 |               |  |               | (491   | )             |  |        | (2,068 | ) |  |             |  |  |  |   | (117,884 | ) |  |   | 50,167  |  
|Net loss                                                                  |  |              |            |          |  |                  |         |               |  |               |        |               |  |        |        |   |  |             |   |  |  |   | (435     | ) |  |   | (435    | )
|Common stock issued through
second public offering, net
of issuance costs |  |              | 4,000,000  |          |  |                  | 51,850  |               |  |               |        |               |  |        |        |   |  |             |   |  |  |   |          |   |  |   | 51,850  |  
|Shares issued through
employee
stock purchase plan                        |  |              | 287,545    |          |  |                  | 595     |               |  |               |        |               |  |        |        |   |  |             |   |  |  |   |          |   |  |   | 595     |  
|Exercise of stock options                                                 |  |              | 1,185,084  |          |  |                  | 3,614   |               |  |               |        |               |  |        |        |   |  |             |   |  |  |   |          |   |  |   | 3,614   |  
|Collection of notes
receivable from
stockholders                          |  |              |            |          |  |                  |         |               |  |               |        |               |  |        | 1,981  |   |  |             |   |  |  |   |          |   |  |   | 1,981   |  
|Deferred stock compensation                                               |  |              |            |          |  |                  | 5       |               |  |               | (5     | )             |  |        |        |   |  |             |   |  |  |   |          |   |  |   |        |  
|Reversal of deferred stock
compensation due to
employee terminations      |  |              |            |          |  |                  | (25     | )             |  |               | 25     |               |  |        |        |   |  |             |   |  |  |   |          |   |  |   |        |  
|Amortization of deferred
stock compensation                               |  |              |           |          |  |                  |        |               |  |               | 441    |               |  |        |       |   |  |             |  |  |  |   |         |   |  |   | 441     |  
|                                                                          |  |              |            |          |  |                  |         |               |  |               |        |               |  |        |        |   |  |             |   |  |  |   |          |   |  |   |         |  
|BALANCES, September 30, 2003                                              |  |              | 53,219,785 |          |  | $                | 226,649 |               |  | $             | (30    | )             |  | $      | (87    | ) |  | $           |  |  |  | $ | (118,319 | ) |  | $ | 108,213 |  
|                                                                          |  |              |            |          |  |                  |         |               |  |               |        |               |  |        |        |   |  |             |   |  |  |   |          |   |  |   |         |  

Total comprehensive loss for the nine months ended September 30, 2003 and
2002 and the three months ended December 31, 2002 is equal to the net loss in
each respective period.

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At Road, Inc.
Condensed Consolidated Statement of Cash Flows
(In thousands)
(unaudited)

|                                                     |                                                                                           |                                                   |                                        |                                                     |       |                   |        |         |       |        |        |  
|---------------------------------------------------- | ----------------------------------------------------------------------------------------- | ------------------------------------------------- | -------------------------------------- | --------------------------------------------------- | ----- | ----------------- | ------ | ------- | ----- | ------ | ------ | -
|                                                     |                                                                                           |                                                   |                                        |                                                     |       | Nine
Months Ended
|                                                     |                                                                                           |                                                   |                                        |                                                     |       | September 30,    
|                                                     |                                                                                           |                                                   |                                        |                                                     |       |                  
|                                                     |                                                                                           |                                                   |                                        |                                                     |       | 2003              |        | 2002   
|                                                     |                                                                                           |                                                   |                                        |                                                     |       |                   |        |        
|Cash flows from operating activities:                |                                                                                           |                                                   |                                        |                                                     |       |                   |        |        
|                                                     | Net loss                                                                                  |                                                   | $                                      | (435                                                | )     |                   | $      | (12,220 | )    
|                                                     | Adjustments to reconcile net loss to net cash provided by
(used in) operating activities: |                                                   |                                        |                                                     |       |                   |        |         |      
|                                                     |                                                                                           | Depreciation and amortization                     |                                        |                                                     | 1,862 |                   |        |         | 3,534 |       
|                                                     |                                                                                           | Loss on disposal of property and equipment        |                                        |                                                     | 6     |                   |        |         | 19    |       
|                                                     |                                                                                           | Investment impairment charge                      |                                        |                                                     |      |                   |        |         | 1,035 |       
|                                                     |                                                                                           | Amortization of deferred stock compensation       |                                        |                                                     | 441   |                   |        |         | 817   |       
|                                                     |                                                                                           | Provision for inventory reserves                  |                                        |                                                     | 1,071 |                   |        |         | 718   |       
|                                                     |                                                                                           | Provision for doubtful accounts and sales returns |                                        |                                                     | (68   | )                 |        |         | 386   |       
|                                                     |                                                                                           | Change in assets and liabilities:                 |                                        |                                                     |       |                   |        |         |       |       
|                                                     |                                                                                           |                                                   | Accounts receivable                    |                                                     |       | 627               |        |         |       | (2,049 | )     
|                                                     |                                                                                           |                                                   | Inventories                            |                                                     |       | 1,998             |        |         |       | 1,278  |       
|                                                     |                                                                                           |                                                   | Deferred product costs                 |                                                     |       | (3,253            | )      |         |       | (974   | )     
|                                                     |                                                                                           |                                                   | Prepaid expenses and other             |                                                     |       | (215              | )      |         |       | (200   | )     
|                                                     |                                                                                           |                                                   | Accounts payable                       |                                                     |       | (993              | )      |         |       | (231   | )     
|                                                     |                                                                                           |                                                   | Accrued and other liabilities          |                                                     |       | 1,152             |        |         |       | 412    |       
|                                                     |                                                                                           |                                                   | Deferred revenue and customer deposits |                                                     |       | 3,079             |        |         |       | 1,360  |       
|                                                     |                                                                                           |                                                   |                                        |                                                     |       |                   |        |        
|                                                     |                                                                                           |                                                   |                                        | Net cash provided by (used in) operating activities |       |                   | 5,272  |         |       |        | (6,115 | )
|                                                     |                                                                                           |                                                   |                                        |                                                     |       |                   |        |        
|Cash flows from investing activities:                |                                                                                           |                                                   |                                        |                                                     |       |                   |        |        
|                                                     | Purchase of property and equipment                                                        |                                                   |                                        | (1,094                                              | )     |                   |        | (445    | )    
|                                                     | Proceeds from the sale of restricted short-term investments                               |                                                   |                                        | 241                                                 |       |                   |        |        |      
|                                                     | Interest received on restricted short-term investments                                    |                                                   |                                        |                                                    |       |                   |        | (19     | )    
|                                                     | Other assets                                                                              |                                                   |                                        | 277                                                 |       |                   |        | (116    | )    
|                                                     |                                                                                           |                                                   |                                        |                                                     |       |                   |        |        
|                                                     |                                                                                           |                                                   |                                        | Net cash used in investing activities               |       |                   | (576   | )       |       |        | (580   | )
|Cash flows from financing activities:                |                                                                                           |                                                   |                                        |                                                     |       |                   |        |        
|                                                     | Net proceeds from sale of common stock                                                    |                                                   |                                        | 56,059                                              |       |                   |        | 1,168   |      
|                                                     | Proceeds from payments on notes receivable issued to stockholders                         |                                                   |                                        | 1,981                                               |       |                   |        | 554     |      
|                                                     |                                                                                           |                                                   |                                        |                                                     |       |                   |        |        
|                                                     |                                                                                           |                                                   |                                        | Net cash provided by financing activities           |       |                   | 58,040 |         |       |        | 1,722  |  
|                                                     |                                                                                           |                                                   |                                        |                                                     |       |                   |        |        
|Net increase (decrease) in cash and cash equivalents |                                                                                           |                                                   | 62,736                                 |                                                     |       |                   | (4,973 | )      
|Cash and cash equivalents:                           |                                                                                           |                                                   |                                        |                                                     |       |                   |        |        
|                                                     | Beginning of period                                                                       |                                                   |                                        | 35,659                                              |       |                   |        | 40,164  |      
|                                                     |                                                                                           |                                                   |                                        |                                                     |       |                   |        |        
|                                                     | End of period                                                                             |                                                   | $                                      | 98,395                                              |       |                   | $      | 35,191  |      
|                                                     |                                                                                           |                                                   |                                        |                                                     |       |                   |        |         |      
|Non-cash investing and financing activities:         |                                                                                           |                                                   |                                        |                                                     |       |                   |        |        
|                                                     | Deferred stock compensation                                                               |                                                   | $                                      | 5                                                   |       |                   | $      | 17      |      
|                                                     |                                                                                           |                                                   |                                        |                                                     |       |                   |        |         |      
|                                                     | Reversal of deferred stock compensation                                                   |                                                   | $                                      | 25                                                  |       |                   | $      | 795     |      
|                                                     |                                                                                           |                                                   |                                        |                                                     |       |                   |        |         |      
|                                                     | Repurchase of common stock through cancellation of notes
receivable                       |                                                   | $                                      |                                                    |       |                   | $      | 126     |      
|                                                     |                                                                                           |                                                   |                                        |                                                     |       |                   |        |         |      

See notes to condensed consolidated financial statements.

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At Road, Inc.
Notes To Condensed Consolidated Financial Statements
(Unaudited)

Note 1  Basis of Presentation and Summary of Significant Accounting Policies

The accompanying condensed consolidated financial statements were prepared
by At Road, Inc., without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (SEC). Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States of America
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes the disclosures which are made are adequate to make the
information presented not misleading. In the opinion of management, the
financial statements include all adjustments necessary to fairly present the
financial condition, results of operations, and cash flows for such periods.
Results of operations for the periods presented are not necessarily indicative
of results for any other interim period or for the full year. These condensed
consolidated financial statements should be read in conjunction with the
Companys consolidated financial statements and notes thereto in its Form
10-K/A for the year ended December 31, 2002 (No. 000-31511), filed with the
SEC.

Motorola is the sole supplier of microcontrollers used in the Companys
products. The Company expects to rely on Motorola as a source for this
component for the next several years. Taiwan Semiconductor Manufacturing
Company (TSMC) is the sole manufacturer of the Companys Global Positioning
System digital receiver chips used in some of the Companys products. The
Company expects to rely on TSMC as a source for this component for at least the
next twelve months.

Certain reclassifications have been made to the 2002 financial statements
to conform to the 2003 presentation. These reclassifications had no material
effect on net loss or stockholders equity.

Note 2  Basic and Diluted Net Income (Loss) per Share

Basic net income (loss) per share is computed by dividing the net income
(loss) attributable to common stockholders by the weighted average number of
shares of common stock outstanding for the period (excluding shares subject to
repurchase). Diluted loss per common share reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock. Common share equivalents are excluded
from the computation in loss periods, as their effect would be antidilutive.

The following is a reconciliation of the denominators used in calculating
basic and diluted net income (loss) per share (in thousands):

|                                                                 |  |               |        |                   |  |      |        |      |  |   |        |   |  |   |         |  
|---------------------------------------------------------------- |  | ------------- | ------ | ----------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------- | -
|                                                                 |  | Three Months  |        |                   |  |      |        |      |  |  
|                                                                 |  | Ended         |        | Nine
Months Ended
|                                                                 |  | September 30, |        | September 30,    
|                                                                 |  |               |        |                  
|                                                                 |  | 2003          |        | 2002              |  | 2003 |        | 2002
|                                                                 |  |               |        |                   |  |      |        |     
|Net income (loss), basic and diluted                             |  | $             | 1,095  |                   |  | $    | (2,763 | )    |  | $ | (435   | ) |  | $ | (12,220 | )
|Weighted average common shares
outstanding                       |  |               | 50,797 |                   |  |      | 47,135 |      |  |   | 49,016 |   |  |   | 46,895  |  
|Weighted average common shares
outstanding subject to repurchase |  |               | (108   | )                 |  |      | (780   | )    |  |   | (195   | ) |  |   | (1,046  | )
|                                                                 |  |               |        |                   |  |      |        |      |  |   |        |   |  |   |         |  
|Shares used in computation of basic
net income (loss) per share  |  |               | 50,689 |                   |  |      | 46,355 |      |  |   | 48,821 |   |  |   | 45,849  |  
|                                                                 |  |               |        |                   |  |      |        |      |  |   |        |   |  |   |         |  
|Weighted average common shares
outstanding subject to repurchase |  |               | 108    |                   |  |      | n/a    |      |  |   | n/a    |   |  |   | n/a     |  

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|                                                                                                           |  |               |        |                   |  |      |        |      |  |    |        |   |  |    |        |  
|---------------------------------------------------------------------------------------------------------- |  | ------------- | ------ | ----------------- |  | ---- | ------ | ---- |  | -- | ------ | - |  | -- | ------ | -
|                                                                                                           |  | Three Months  |        |                   |  |      |        |      |  |   
|                                                                                                           |  | Ended         |        | Nine
Months Ended
|                                                                                                           |  | September 30, |        | September 30,    
|                                                                                                           |  |               |        |                  
|                                                                                                           |  | 2003          |        | 2002              |  | 2003 |        | 2002
|                                                                                                           |  |               |        |                   |  |      |        |     
|Common shares issuable upon
exercise of stock options and
employee stock purchases (treasury
stock method) |  |               | 5,016  |                   |  |      | n/a    |      |  |    | n/a    |   |  |    | n/a    |  
|Shares used in computation of
diluted net income (loss) per share                                          |  |               | 55,813 |                   |  |      | 46,355 |      |  |    | 48,821 |   |  |    | 45,849 |  
|                                                                                                           |  |               |        |                   |  |      |        |      |  |    |        |   |  |    |        |  
|Basic net income (loss) per share                                                                          |  | $             | 0.02   |                   |  | ($   | 0.06   | )    |  | ($ | 0.01   | ) |  | ($ | 0.27   | )
|                                                                                                           |  |               |        |                   |  |      |        |      |  |    |        |   |  |    |        |  
|Diluted net income (loss) per share                                                                        |  | $             | 0.02   |                   |  | ($   | 0.06   | )    |  | ($ | 0.01   | ) |  | ($ | 0.27   | )
|                                                                                                           |  |               |        |                   |  |      |        |      |  |    |        |   |  |    |        |  

The total number of options and restricted stock subject to repurchase
excluded from the diluted net loss per share computation for the nine months
ended September 30, 2003 and the three and nine months ended September 30, 2002
were as follows (in thousands):

|                                             |  |               |    |               |  |      |       |      |  |  |       |  |  |  |       | 
|-------------------------------------------- |  | ------------- | -- | ------------- |  | ---- | ----- | ---- |  |  | ----- |  |  |  | ----- | 
|                                             |  | Three Months  |    | Nine Months  
|                                             |  | Ended         |    | Ended        
|                                             |  | September 30, |    | September 30,
|                                             |  |               |    |              
|                                             |  | 2003          |    | 2002          |  | 2003 |       | 2002
|                                             |  |               |    |               |  |      |       |     
|Shares of common stock subject to
repurchase |  |               |   |               |  |      | 607   |      |  |  | 79    |  |  |  | 607   | 
|Outstanding options                          |  |               | 97 |               |  |      | 8,011 |      |  |  | 7,688 |  |  |  | 8,011 | 

Note 3  Balance Sheet Items

Inventories consist of raw materials, work in process and finished goods,
and are stated at the lower of cost (average cost) or market and consist of the
following (in thousands):

|                |  |               |       |              |  |   |       |  |  |  |  |  |  |  |  | 
|--------------- |  | ------------- | ----- | ------------ |  | - | ----- |  |  |  |  |  |  |  |  | 
|                |  | September 30, |       | December 31,
|                |  | 2003          |       | 2002        
|                |  |               |       |             
|Raw materials   |  | $             | 1,182 |              |  | $ | 3,183 | 
|Work in process |  |               | 166   |              |  |   | 389   | 
|Finished goods  |  |               | 982   |              |  |   | 1,827 | 
|                |  |               |       |              |  |   |       | 
|Total           |  | $             | 2,330 |              |  | $ | 5,399 | 
|                |  |               |       |              |  |   |       | 

Deferred product costs and other current assets consist of the following
(in thousands):

|                               |  |               |        |              |  |   |       |  |  |  |  |  |  |  |  | 
|------------------------------ |  | ------------- | ------ | ------------ |  | - | ----- |  |  |  |  |  |  |  |  | 
|                               |  | September 30, |        | December 31,
|                               |  | 2003          |        | 2002        
|                               |  |               |        |             
|Current deferred product costs |  | $             | 11,080 |              |  | $ | 8,694 | 
|Prepaid expenses and other     |  |               | 1,458  |              |  |   | 1,243 | 
|                               |  |               |        |              |  |   |       | 
|Total                          |  | $             | 12,538 |              |  | $ | 9,937 | 
|                               |  |               |        |              |  |   |       | 

Deferred product costs, intangibles, and other assets consist of the
following (in thousands):

|                                   |  |               |       |              |  |   |       |  |  |  |  |  |  |  |  | 
|---------------------------------- |  | ------------- | ----- | ------------ |  | - | ----- |  |  |  |  |  |  |  |  | 
|                                   |  | September 30, |       | December 31,
|                                   |  | 2003          |       | 2002        
|                                   |  |               |       |             
|Purchased technology               |  | $             | 38    |              |  | $ | 483   | 
|Non-current deferred product costs |  |               | 7,033 |              |  |   | 6,166 | 
|Other                              |  |               | 481   |              |  |   | 758   | 
|                                   |  |               |       |              |  |   |       | 
|Total                              |  | $             | 7,552 |              |  | $ | 7,407 | 
|                                   |  |               |       |              |  |   |       | 

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Deferred revenue and customer deposits consist of the following (in
thousands):

|                  |  |               |       |              |  |   |       | 
|----------------- |  | ------------- | ----- | ------------ |  | - | ----- | 
|                  |  | September 30, |       | December 31,
|                  |  | 2003          |       | 2002        
|                  |  |               |       |             
|Deferred revenue  |  | $             | 8,856 |              |  | $ | 7,155 | 
|Customer deposits |  |               | 358   |              |  |   | 439   | 
|                  |  |               |       |              |  |   |       | 
|Total             |  | $             | 9,214 |              |  | $ | 7,594 | 
|                  |  |               |       |              |  |   |       | 

Note 4  Stock-Based Awards

The Company accounts for stock-based awards to employees using the
intrinsic value method in accordance with Accounting Principles Board Opinion
(APB) No. 25, Accounting for Stock Issued to Employees, and its related
interpretations. Accordingly, no compensation expense has been recognized in
the financial statements for employee stock arrangements granted at fair market
value.

The Company accounts for equity instruments issued to non-employees in
accordance with the provisions of Statement of Financial Accounting Standards
(SFAS) No. 123, Accounting for Stock-Based Compensation, and Emerging Issues
Task Force (EITF) Issue No. 96-18, Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services, which requires that the fair value of such instruments be
recognized as an expense over the period in which the related services are
received.

SFAS No. 123 requires the disclosure of pro forma net income or loss had
the Company adopted the fair value method. Under SFAS No. 123, the fair value
of stock-based awards to employees is calculated through the use of option
pricing models, even though such models were developed to estimate the fair
value of freely tradable, fully transferable options without vesting
restrictions, which significantly differ from the Companys stock option
awards. These models also require subjective assumptions, including expected time to
exercise, which greatly affect the calculated values. The Companys
calculations are based on a single option valuation approach, and forfeitures
are recognized as they occur. The Company used the following weighted average
assumptions:

|                              |                          |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  
|----------------------------- | ------------------------ |  | ------------------ | ------ | ----------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                              |                          |  | Three Months Ended |        | Nine Months Ended
|                              |                          |  | September 30,      |        | September 30,    
|                              |                          |  |                    |        |                  
|                              |                          |  | 2003               |        | 2002              |  | 2003 |        | 2002
|                              |                          |  |                    |        |                   |  |      |        |     
|Stock Option Plans:           |                          |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |       
|                              | Risk free interest rate  |  |                    | 2.85   | %                 |  |      | 3.56   | %    |  |   | 2.79   | % |  |   | 3.56   | %
|                              | Expected volatility      |  |                    | 115.00 | %                 |  |      | 124.00 | %    |  |   | 116.00 | % |  |   | 124.00 | %
|                              | Expected life (in years) |  |                    | 5      |                   |  |      | 5      |      |  |   | 5      |   |  |   | 5      |  
|                              | Expected dividend        |  | $                  | 0.00   |                   |  | $    | 0.00   |      |  | $ | 0.00   |   |  | $ | 0.00   |  
|Employee Stock Purchase Plan: |                          |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |       
|                              | Risk free interest rate  |  |                    | 1.13   | %                 |  |      | 1.61   | %    |  |   | 1.22   | % |  |   | 1.61   | %
|                              | Expected volatility      |  |                    | 115.00 | %                 |  |      | 124.00 | %    |  |   | 117.00 | % |  |   | 124.00 | %
|                              | Expected life (in years) |  |                    | 0.5    |                   |  |      | 0.5    |      |  |   | 0.5    |   |  |   | 0.5    |  
|                              | Expected dividend        |  | $                  | 0.00   |                   |  | $    | 0.00   |      |  | $ | 0.00   |   |  | $ | 0.00   |  

If the computed minimum values of the Companys stock-based awards to
employees had been amortized to expense over the vesting period of the awards
as specified under SFAS No. 123, net income (loss) and basic and diluted income
(loss) per share on a pro forma basis (as compared to such items as reported)
would have been (in thousands, except per share amounts):

|                              |  |   |                    |  |                   |   |        |   |      |   |      |   |  |   |         |   | 
|----------------------------- |  | - | ------------------ |  | ----------------- | - | ------ | - | ---- | - | ---- | - |  | - | ------- | - | 
|                              |  |   | Three Months Ended |  | Nine Months Ended
|                              |  |   | September 30,      |  | September 30,    
|                              |  |   |                    |  |                  
|                              |  |   | 2003               |  | 2002              |   | 2003   |   | 2002
|                              |  |   |                    |  |                   |   |        |   |     
|Net income (loss) as reported |  | $ | 1,095              |  |                   | $ | (2,763 | ) |      | $ | (435 | ) |  | $ | (12,220 | )

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|                                                                                        |             |   |                    |       |                   |   |        |       |      |   |        |       |   |   |         |       |  
|--------------------------------------------------------------------------------------- | ----------- | - | ------------------ | ----- | ----------------- | - | ------ | ----- | ---- | - | ------ | ----- | - | - | ------- | ----- | -
|                                                                                        |             |   | Three Months Ended |       | Nine Months Ended
|                                                                                        |             |   | September 30,      |       | September 30,    
|                                                                                        |             |   |                    |       |                  
|                                                                                        |             |   | 2003               |       | 2002              |   | 2003   |       | 2002
|                                                                                        |             |   |                    |       |                   |   |        |       |     
|Less: stock based employee
compensation expense
included in reported net
loss           |             |   | 154                |       |                   |   | 377    |       |      |   | 435    |       |   |   | 775     |      
|Add: stock-based employee
compensation expense
determined under fair value
based method |             |   | (2,391             | )     |                   |   | (2,341 | )     |      |   | (6,695 | )     |   |   | (6,288  | )    
|                                                                                        |             |   |                    |       |                   |   |        |       |      |   |        |       |   |   |         |      
|Pro forma net loss                                                                      |             | $ | (1,142             | )     |                   | $ | (4,727 | )     |      | $ | (6,695 | )     |   | $ | (17,733 | )    
|                                                                                        |             |   |                    |       |                   |   |        |       |      |   |        |       |   |   |         |      
|Basic net loss per share:                                                               |             |   |                    |       |                   |   |        |       |      |   |        |       |   |   |         |      
|                                                                                        | As reported |   | $                  | 0.02  |                   |   | $      | (0.06 | )    |   | $      | (0.01 | ) |   | $       | (0.27 | )
|                                                                                        |             |   |                    |       |                   |   |        |       |      |   |        |       |   |   |         |      
|                                                                                        | Pro forma   |   | $                  | (0.02 | )                 |   | $      | (0.10 | )    |   | $      | (0.14 | ) |   | $       | (0.39 | )
|                                                                                        |             |   |                    |       |                   |   |        |       |      |   |        |       |   |   |         |      
|Diluted net loss per share:                                                             |             |   |                    |       |                   |   |        |       |      |   |        |       |   |   |         |      
|                                                                                        | As reported |   | $                  | 0.02  |                   |   | $      | (0.06 | )    |   | $      | (0.01 | ) |   | $       | (0.27 | )
|                                                                                        |             |   |                    |       |                   |   |        |       |      |   |        |       |   |   |         |      
|                                                                                        | Pro forma   |   | $                  | (0.02 | )                 |   | $      | (0.10 | )    |   | $      | (0.14 | ) |   | $       | (0.39 | )
|                                                                                        |             |   |                    |       |                   |   |        |       |      |   |        |       |   |   |         |      

Notes 5  Intangible Assets

On January 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other
Intangible Assets. As the Company does not have any goodwill, only specifically
identifiable intangible assets are assessed.

In October 2002, the Company completed the acquisition of an additional
$83,000 of purchased technology. This intangible asset is being amortized on a
straight-line basis over an estimated useful life of two years.

Information regarding the Companys intangible asset is as follows (in
thousands):

|                     |  |                       |       |                      |  |     |        |        |  |              |    |             |  |   |       |  |  |   |        |   |  |   |     | 
|-------------------- |  | --------------------- | ----- | -------------------- |  | --- | ------ | ------ |  | ------------ | -- | ----------- |  | - | ----- |  |  | - | ------ | - |  | - | --- | 
|                     |  | At September 30, 2003 |       | At December 31, 2002
|                     |  |                       |       |                     
|                     |  | Carrying              |       | Accumulated          |  |     |        |        |  | Carrying     |    | Accumulated |  |   |       | 
|                     |  | Amount                |       | Depreciation         |  | Net |        | Amount |  | Depreciation |    | Net        
|                     |  |                       |       |                      |  |     |        |        |  |              |    |            
|Purchased technology |  | $                     | 5,052 |                      |  | $   | (5,014 | )      |  | $            | 38 |             |  | $ | 5,052 |  |  | $ | (4,569 | ) |  | $ | 483 | 

For the nine months ended September 30, 2003 and 2002, amortization of
purchased technology was $445,000 and $1,246,000, respectively. The estimated
amortization for subsequent years is as follows as of September 30, 2003 (in
thousands):

|                                           |       |   |              |    | 
|------------------------------------------ | ----- | - | ------------ | -- | 
|                                           |       |   | Amortization
|                                           |       |   | Expense     
|                                           |       |   |             
|Remainder of year ending
December 31, 2003 |       | $ | 10           |   
|Year ended December 31, 2004               |       |   | 28           |   
|                                           |       |   |              |   
|                                           | Total |   | $            | 38 | 
|                                           |       |   |              |   

Note 6  Segment Reporting

In the three and nine months ended September 30, 2003 and 2002, the
Company operated in a single reportable segment. The Company plans to evaluate
additional segment disclosure requirements as it expands its operations. The
Company had no significant revenues from customers outside of the United States
for the three and nine months ended September 30, 2003 and 2002 and had no
significant long-lived assets deployed outside the United States at September
30, 2003.

Note 7  Recently Issued Accounting Pronouncements

In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45),
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others.FIN 45 requires that upon
issuance of a guarantee, the guarantor must recognize a liability for the fair
value of the obligation it assumes under that guarantee. The initial
recognition and measurement provisions of FIN 45 apply on a prospective basis
to guarantees issued or modified after December 31, 2002. The Company adopted
the disclosure requirements of FIN 45 effective December 31, 2002. As the
Company did not have any material guarantees outstanding, the

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adoption of FIN 45 did not have an effect on the Companys financial
statements.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure, which amends FASB Statement No. 123,
Accounting for Stock-Based Compensation. SFAS No. 148 provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SFAS No. 148
amends the disclosure requirements of SFAS No. 123 to require prominent
disclosure about the effects on reported net income of an entitys accounting
policy decision with respect to stock-based employee compensation, and requires
disclosure about those effects in both annual and interim financial statements.
SFAS No. 148 is effective for fiscal years ending after December 15, 2002. The
Company does not expect to change to using the fair value based method of
accounting for stock-based employee compensation; therefore, adoption of SFAS
No. 148 is not expected to have an impact on the financial position, results of
operations or cash flows of the Company.

In November 2002, the EITF reached a consensus on the Issue No. 00-21,
Accounting for Revenue Arrangements With Multiple Deliverables(EITF Issue No.
00-21). The EITF concluded that revenue arrangements with multiple elements
should be divided into separate units of accounting if the deliverables in the
arrangement have value to the customer on a standalone basis, if there is
objective and reliable evidence of the fair value of the undelivered elements,
and as long as there are no rights of return or additional performance
guarantees by the seller. The provisions of EITF Issue No. 00-21 are applicable
to revenue arrangements entered into in fiscal periods beginning after June 15,
2003. The Company has determined the provisions of EITF Issue No. 00-21 will
not have an impact on its operating results or financial condition.

Footnote 8  Contingencies

In the third quarter of 2002, AT&T Wireless announced that it expects to
cease operating its Cellular Digital Packet Data network by June 30, 2004. The
Company is currently in discussions with AT&T Wireless and other wireless
carriers to minimize any disruption of the provision of its services to
subscribers. On or about the actual termination date of AT&T Wireless Cellular
Digital Packet Data network and where possible, certain affected subscribers
would be transferred to alternate Cellular Digital Packet Data networks without
a change to the hardware platform then used by those subscribers. However, the
Company currently estimates that as of June 30, 2004 the Company will have
approximately 11,000 subscribers in their initial contract periods that are
then using AT&T Wireless Cellular Digital Packet Data network and that would
need to use an alternate wireless protocol to continue to use the Companys
services. To use an alternate wireless protocol, existing hardware platforms
would have to be replaced for these subscribers. The Company does not expect to
realize a loss on the sale of these replacement hardware platforms. While there
is no assurance, the Company does not expect that the termination of AT&T
Wireless Cellular Digital Packet Data network will have a material adverse
impact on its financial results.

In
its Report on Form 10-K filed with the Securities and
Exchange Commission on March 27, 2003, Verizon Wireless disclosed that it
expects to cease operating its Cellular Digital Packet Data network
at the end of 2005. We estimate that as of December 31, 2005 we will
have 5,000 subscribers in their initial contract periods that are
then using Verizon Wireless Cellular Digital Packet Data
network and that would need to use an alternate wireless protocol to
continue to use our services. To use an alternate wireless protocol,
existing hardware platforms would have to be replaced for these
subscribers. We do not expect to realize a loss on the sale of these
replacement hardware platforms. While there is no assurance, we do
not expect that the termination of Verizon Wireless Cellular
Digital Packet Data network will have a material adverse impact on
our financial results.




Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.

Except for the historical information contained herein, the matters
discussed in this Form 10-Q are forward-looking statements involving risks and
uncertainties that could cause actual results to differ materially from those
in such forward-looking statements. Potential risks and uncertainties include,
but are not limited to, general economic and political conditions, our
historical and future losses, operating results and profitability, limited
operating history, the infancy of the wireless data industry where there is no
established market for our products and services, our ability to adapt to rapid
technological change and our dependence on wireless networks, network
infrastructure and positioning systems owned and controlled by others. Further
information regarding these and other risks is included in this Form 10-Q, in
our annual report on Form 10-K/A for the year ended December 31, 2002 (No.
000-31511), filed on July 29, 2003, and in our other filings with the SEC. You
should read the following description of our financial condition and results of
operations in conjunction with our financial statements and notes thereto
included in this Form 10-Q, in our Form 10-K/A for the year ended December 31,
2002, and in our other filings with the SEC.

Overview

We are a leading provider of mobile resource management (MRM) services, a
rapidly growing category of business productivity solutions that enable the
effective management of mobile resources. Our MRM services allow customers to
improve productivity by enabling the effective management of the activities of
their mobile workers

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and assets, and their goods and services. In addition, our services are
designed to allow customers to increase the utility of their mobile resources
and decrease costs of operations by facilitating business processes, such as
event confirmation, signature verification, forms processing, project
management and timekeeping while their workers are in the field. Our services
also provide location, reporting, dispatch, messaging, and other management
services and are designed to be easy to implement and use. Our customers can
manage their mobile workers in several ways, including by logging onto our
website, receiving their data directly into their existing software
applications, using any wireline or wireless telephone to access our
speech-to-text voice portal or requesting information from our data centers
using application programming interfaces.

From July 1996 through June 1998, our operations consisted primarily of
various start-up activities relating to our current business, including
development of Global Positioning System technologies, recruiting personnel and
raising capital. We did not recognize any revenues prior to June 1998, and our
expenses consisted of research and development, sales and marketing and general
and administrative expenses. In 1998, we expanded our strategy and redirected
our focus to provide mobile resource management services. In the second half of
1998, we introduced FleetASAP,now called GeoManager, a service that leverages
existing infrastructure, including the Global Positioning System, wireless
networks and the Internet along with integrated transaction processing and
software applications, to enable companies to efficiently manage their mobile
resources. Subsequent to the introduction of FleetASAP,we have introduced a
number of additional services, including GeoManager, Pocket Edition;
@Road Pathway; RoadREPORT; and RoadFORCE; and features to our services.

Our services provide current and historical data relating to a customers
mobile resources in a variety of formats, including activity reports, maps and
completed business forms. We provide these formats in a standard configuration,
and customers can configure certain elements and views themselves to help
achieve compliance with their internal business rules. Customers can choose to
have reports delivered on a pre-scheduled basis, or they can submit queries to
our databases to create reports and views on demand. Customers can also
download reports to manipulate and store data as desired. Mobile resource data
are typically stored by us for 14 days, unless the customer purchases our
extended data storage services.

Our services are enabled by the deployment of a device, which we call a
platform, to each of the customers mobile resources. We call each mobile
resource with a platform a subscriber. Our services operate with three
independent platforms. First, a mobile worker can use our proprietary hardware
device embedded with software that integrates a GPS receiver with a wireless
modem. Second, a mobile worker can use our proprietary hardware device embedded
with software and an integrated GPS receiver and which is tethered by cable to
a wireless telephone. Each of these proprietary hardware devices is called an
Internet Location Manager. The Internet Location Manager is installed in a
mobile workers vehicle. Installation in any type of vehicle typically takes
less than an hour, and is completed by our subcontracted installation agents.
Third, a mobile worker can use a location- or wireless application
protocol-enabled mobile telephone installed with our software application.

These platforms send and receive a variety of information from time to
time and on demand. Such data include location, velocity, time and operational
diagnostics. These data are transmitted to our data centers using wireless
networks and the Internet. If a wireless connection is not available, then the
platform will store up to five days of captured data and seek to transmit the
data when a wireless connection is available.

Since 1998, we have derived substantially all of our revenues from the
sale of our services and the associated product hardware. Our service revenue
is composed of monthly fees. Our customers can contract to receive our services
for terms of one, two or three years and can purchase enhanced service features
for additional fees. As more customers use our services, the impact on our
service revenue is compounded. Our product revenue consists of sales of the
Internet Location Manager, Internet Data Terminal and ruggedized personal
digital assistant.

To date, we have not sold our services outside the United States and
Canada; however, we intend to expand our service offerings to additional
countries in the future. We do not expect that revenues from international
sales will be material in 2004. From 1998 through 2002, no single customer or
group of related customers comprised 10% or more of total revenues. For the
nine months ended September 30, 2003, one customer, Verizon Communications,
represented 16% of total revenues.

Since inception we have invested substantially in research and
development, marketing, the building of our sales channels and our overall
infrastructure. We anticipate that such investments may increase in the future.
Other than

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the three months ended September 30, 2003, we have incurred losses in each
quarter since inception and may incur net losses in the future. At September
30, 2003, we had an accumulated deficit of $118.3 million. Our limited
operating history makes it difficult to forecast future operating results. Even
though we achieved profitability for the three months ended
September 30, 2003, we may not sustain or
increase profitability on a quarterly or annual basis.

In the
third quarter of 2002, AT&T Wireless announced that it expects to
cease operating its Cellular Digital Packet Data network by June 30, 2004. We
are currently in discussions with AT&T Wireless and other wireless carriers to
minimize any disruption of the delivery of our services to subscribers. On or
about the actual termination date of AT&T Wireless Cellular Digital Packet
Data network and where possible, certain affected subscribers would be
transferred to alternate Cellular Digital Packet Data networks without a change
to the hardware platform then used by those subscribers. However, we currently
estimate that as of June 30, 2004 we will have approximately 11,000 subscribers
in their initial contract periods that are then using AT&T Wireless Cellular
Digital Packet Data network and that would need to use an alternate wireless
protocol to continue to use our services. To use an alternate wireless
protocol, existing hardware platforms would have to be replaced for these
subscribers. We do not expect to realize a loss on the sale of these
replacement hardware platforms. While there is no assurance, we do not expect
that the termination of AT&T Wireless Cellular Digital Packet Data network
will have a material adverse impact on our financial results.

In its
Report on Form 10-K filed with the Securities and Exchange
Commission on March 27, 2003, Verizon Wireless disclosed that
it expects to cease operating its Cellular Digital Packet Data
network at the end of 2005. We estimate that as of December 31,
2005 we will have 5,000 subscribers in their initial contract periods
that are then using Verizon Wireless' Cellular Digital Packet Data
network and that would need to use an alternate wireless protocol to
continue to use our services. To use an alternate wireless protocol,
existing hardware platforms would have to be replaced for these
subscribers. We do not expect to realize a loss on the sale of these
replacement hardware platforms. While there is no assurance, we do
not expect that the termination of Verizon Wireless' Cellular Digital
Packet Data network will have a material adverse impact on our
financial results.

Critical accounting policies

Financial Reporting Release No. 60, which was released by the SEC in
January 2002, requires all companies to include a discussion of critical
accounting policies or methods used in the preparation of financial statements.
Included in Note 1 of the Notes to the Consolidated Financial Statements in our
annual report on Form 10-K/A for the year ended December 31, 2002 (No.
000-31511) is a summary of the significant accounting policies and methods we
use. The following is a discussion of the more significant of these policies
and methods.

Revenue recognition

In accordance with applicable accounting standards, including SOP No.
97-2, Software Revenue Recognition, as amended, we recognize revenue when
earned. Specifically, we recognize revenue when the price is fixed and
determinable, upon persuasive evidence of an agreement, when we have fulfilled
our obligations under any such agreement and upon a determination that
collection is probable.

Through September 30, 2003, our services have been available only by using
our platform or a location- or wireless application protocol-enabled mobile
telephone. Accordingly, through September 30, 2003, service revenue, which is
composed of monthly fees, was recognized ratably over the minimum service
contract period, which commenced (a) upon installation where customers have
installed our platform in mobile worker vehicles or (b) upon the creation of
subscription licenses and a customer account on our website where customers
have elected to use our services with a location-enabled mobile telephone.

Our product revenue primarily consists of sales of the Internet Location
Manager, Internet Data Terminal and ruggedized personal digital assistant. We
defer product revenue at installation and recognize it ratably over the minimum
service contract period, which generally is two or three years. Renewal rates
for our services are not considered priced at a bargain in comparison to the
initial sales price of an associated product (as described in Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements). Changes to the
pricing of our products and services in the future could result in the
recognition of product revenue over periods that extend beyond the minimum
service contract period. Allowances for sales returns are recorded at the time
product revenue is recognized.

Historically, the selling prices of our products have often been at or
below our costs. Product costs not in excess of related product revenue are
deferred at the time of shipment and amortized ratably over the minimum service
contract period. Where the selling prices of our products are below our costs,
we expense the difference at the time of shipment of the related products.

Allowances for doubtful accounts

Historically, we have had a significant number of small- to medium-sized
companies utilizing our services.

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These customers are involved in diverse businesses. Our payment
arrangements with customers generally provide 30-day payment terms. At the time
that customers contract with us for our services, we assess their
creditworthiness.

During economic downturns, certain of our customers have had difficulty
with their cash flows. The nature of our relationship with customers is
inherently long-term and we have extended and may extend payment terms on an
exception basis. We regularly review our customers ability to satisfy their
payment obligations and provide an allowance for doubtful accounts for all
specific receivables that we believe are not collectible. When these conditions
arise, we suspend recognition of revenue until collection becomes probable or
cash is collected. Beyond these specific customer accounts, we record an
allowance based on the size and age of all receivable balances against which we
have not established a specific allowance. These allowances are based on our
experience in collecting such accounts.

Although we believe that we can make reliable estimates for doubtful
accounts, the size and diversity of our customer base, as well as overall
economic conditions, may affect our ability to accurately estimate revenue and
bad debt expense. Actual results may differ from those estimates.

RESULTS OF OPERATIONS

Three and nine months ended September 30, 2003 and 2002

|                                                                            |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |        |  
|--------------------------------------------------------------------------- |  | ------------------ | ------ | ----------------- |  | ---- | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                            |  | Three Months Ended |        | Nine Months Ended
|                                                                            |  | September 30,      |        | September 30,    
|                                                                            |  | 2003               |        | 2002              |  | 2003 |       | 2002
|                                                                            |  |                    |        |                   |  |      |       |     
|Service revenue                                                             |  | $                  | 13,113 |                   |  | $    | 8,657 |      |  | $ | 35,851 |   |  | $ | 23,865 |  
|Cost of service revenue (excluding
intangibles amortization included below) |  |                    | 3,782  |                   |  |      | 3,440 |      |  |   | 11,840 |   |  |   | 9,974  |  
|Intangibles amortization                                                    |  |                    | 11     |                   |  |      | 418   |      |  |   | 445    |   |  |   | 1,246  |  
|Stock compensation - cost of service revenue                                |  |                    | 2      |                   |  |      | 7     |      |  |   | 9      |   |  |   | 18     |  
|                                                                            |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |        |  
|Total cost of service revenue                                               |  |                    | 3,795  |                   |  |      | 3,865 |      |  |   | 12,294 |   |  |   | 11,238 |  
|                                                                            |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |        |  
|Service gross margin                                                        |  | $                  | 9,318  |                   |  | $    | 4,792 |      |  | $ | 23,557 |   |  | $ | 12,627 |  
|                                                                            |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |        |  
|Service gross margin percentage                                             |  |                    | 71     | %                 |  |      | 55    | %    |  |   | 66     | % |  |   | 53     | %

Service revenue

Service
revenue increased 51% and 50% for the three months and nine months
ended September 30, 2003 from the same periods in 2002, as a direct result of
the growth in our installed base of subscribers to our services. Subscribers
were 117,000, 109,000, and 90,000, at September 30, 2003, June 30, 2003, and
December 31, 2002, respectively; subscribers were 84,000, 77,000, and 66,000 at
September 30, 2002, June 30, 2002, and December 31, 2001, respectively. In
addition to subscriber growth, our service revenue is affected by a number of
factors, including the rate at which service features or add-ons are adopted
and pricing associated with the size and term of customer contracts. Given the
fixed nature of our arrangements with our customers and ratable revenue
recognition, the impact on revenues of changes in current prices for products
and services is tempered because revenues from new pricing are layered on top
of revenues from existing subscribers. Price changes did not have a material
impact on service revenue between periods. Achieved average monthly
revenue per subscriber was approximately $38.68 for the three months
ended September 30, 2003, up from $35.85 for the same period in
2002. Of the increase, approximately $0.92 was related to adoption of
additional service capabilities and features by subscribers. The
remaining increase of approximately $1.91 was the result of price
changes associated with the types of services and size and term of
contracts for new subscribers as those new revenues were layered on
top of revenues from existing customers. Achieved average monthly
revenue per subscriber was approximately $38.49 for the nine months
ended September 30, 2003, up from $35.36 for the same period in
2002. Of the increase, approximately $0.93 was related to adoption of
additional service capabilities and features by subscribers. The
remaining increase of approximately $2.20 was the result of price
changes associated with the types of services and size and term of
contracts for new subscribers as those new revenues were layered on
top of revenues from existing customers.

Cost of service revenue (excluding intangibles amortization)

Cost of service revenue consists of expenses related to the delivery and
support of our services. Direct expenses are composed of costs associated with
connecting our services to wireless networks and the Internet and royalty and
subscription fees paid to others. Support and other delivery costs include such
expenses as employee salaries and related expenses and depreciation of our data
centers. Cost of service revenue increased to $3.8 million from $3.4

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million for the three months ended September 30, 2003 and 2002,
respectively. The increase in cost of service revenue resulted from an increase
of $364,000 in direct service delivery expenses, consistent with growth in our
installed base of subscribers, and an increase in employee-related costs of
$171,000. These increases were offset by a reduction in depreciation expense
of $220,000 as certain assets became fully depreciated. Cost of service revenue
increased to $11.8 million from $10.0 million for the nine months ended
September 30, 2003 and 2002, respectively. This increase in cost of service
revenue resulted from increases in direct service delivery expenses of $1.7
million and in employee-related costs of $508,000. The increases are
consistent with growth in our installed base of subscribers and were offset by
a reduction in depreciation expense of $379,000 as certain assets became fully
depreciated. Cost of service revenue headcount increased to 84 from 60 at
September 30, 2003 and 2002, respectively. We believe that headcount increases
during the next 12 months will be moderate. Direct expenses generally increase
at a rate proportional to the growth in subscribers using our services.
Personnel costs and depreciation expense generally increase at a slower rate
than the growth rate of subscribers to our services. As a result, we expect
that the growth in service revenue will be greater than the growth in cost of
service revenue as we continue to add subscribers.

Service gross margin

During the three and nine months ended September 30, 2003 and 2002, service
gross margins improved to 71% from 55% and to 66% from 53%, respectively, as a
result of increased service revenue, associated with growth in our installed
base of subscribers, and a smaller increase in overall cost of service revenue,
including intangibles amortization. Average subscribers increased 40% and 38%
for the three and nine months ended September 30, 2003 compared to the same
periods in the prior year. Cost of service revenue includes fixed indirect
expenses and, therefore, generally increases at rates slower than the growth in
our installed base of subscribers.

|                                                                            |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  
|--------------------------------------------------------------------------- |  | ------------------ | ------ | ----------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                            |  | Three Months Ended |        | Nine Months Ended
|                                                                            |  | September 30,      |        | September 30,    
|                                                                            |  | 2003               |        | 2002              |  | 2003 |        | 2002
|                                                                            |  |                    |        |                   |  |      |        |     
|Product revenue                                                             |  | $                  | 3,503  |                   |  | $    | 2,659  |      |  | $ | 10,275 |   |  | $ | 7,609  |  
|Cost of product revenue (excluding
intangibles amortization included below) |  |                    | 5,249  |                   |  |      | 4,265  |      |  |   | 15,078 |   |  |   | 12,015 |  
|Stock compensation - cost of product revenue                                |  |                    | 11     |                   |  |      | 25     |      |  |   | 25     |   |  |   | 81     |  
|                                                                            |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  
|Total cost of product revenue                                               |  |                    | 5,260  |                   |  |      | 4,290  |      |  |   | 15,103 |   |  |   | 12,096 |  
|                                                                            |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  
|Product gross deficit                                                       |  | $                  | (1,757 | )                 |  | $    | (1,631 | )    |  | $ | (4,828 | ) |  | $ | (4,487 | )
|                                                                            |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  
|Product gross deficit percentage                                            |  |                    | -50    | %                 |  |      | -61    | %    |  |   | -47    | % |  |   | -59    | %

Product revenue

Product revenue increased 32% and 35% for the three and nine months ended
September 30, 2003, respectively, from the same periods in 2002. This growth is
consistent with the growth in our installed base of subscribers. As new
subscribers are added to our installed base, the amount of both deferred
revenue and deferred costs recognized ratably over the minimum service contract
period increases as well. Upon completion of the initial term of a customers
contract, recognition of both deferred product revenue and product cost will be
complete. Customers may then renew their agreements for future services without
the purchase of new hardware and, therefore, we anticipate that product revenue
will grow more slowly than service revenue.

Cost of product revenue

Cost of product revenue consists of the cost of the Internet Location
Manager, Internet Data Terminal, ruggedized personal digital assistant and
related parts; costs associated with the final assembly, test, provisioning,

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delivery and installation of our products; and other costs such as
provisions for inventory and repair costs. Historically, the selling prices of
our products were often at or below our costs. Product costs not in excess of
related product revenue are deferred at the time of shipment and amortized
ratably over the minimum service contract period. Where the selling prices of
our products are below our costs, we expense the difference at the time of
shipment of the related products. Generally, we expect the selling prices of
our products to be approximately equal to or exceed the product costs in future
periods. The impact of selling products below our cost on future cash flow from
operations is expected to be minimal. As new subscribers are added to our
installed base, the amount of both deferred revenue and deferred costs
recognized ratably increases. Upon completion of the initial term of a
customers contract, recognition of both deferred product revenue and product
cost is complete. Customers may then renew their agreements for future services
without the purchase of new hardware and, therefore, we anticipate that product
revenue and cost of product revenue will grow more slowly than service revenue.

Cost of product revenue rose to $5.2 million for the three months ended
September 30, 2003 from $4.3 million for the same period in 2002. The increase
in cost of product revenue resulted from an increase in product repair and
refurbishment costs of $397,000, an increase in provisions for inventory
valuation of $396,000, and an increase in deferred product cost recognized
during the period of $194,000. Cost of product revenue rose to $15.1 million
from $12.0 million for the nine months ended September 30, 2003 and 2002,
respectively. The increase in cost of product revenue resulted from a $1.2
million increase in deferred product cost recognized during the period as well
as increases in product repair and refurbishment costs of $1.1 million.

Product gross deficit

During the three and nine months ended September 30, 2003 and 2002, product
gross deficit improved to (50)% from (61)% and to (47)% from (59%),
respectively. Increases in product revenue from deferrals associated with the
growth in our installed base of subscribers were greater than the related
increases in product costs from deferrals. Other costs, including repair
expenses, provisions for inventory valuation and the loss recognized on the
excess of product cost over product revenue also increased
between the three and nine months ended September 30, 2003 and
2002. While we
expect the selling prices of our products to be approximately equal to or to
exceed product costs in future periods, after considering other costs, such as
those described in Cost of product revenue above, we do not expect to
generate significant product gross margin during the next twelve months.

Sales and marketing expenses

Sales and marketing expenses consist of employee salaries, sales
commissions and marketing and promotional expenses. Sales and marketing
expenses increased to $2.9 million for the three months ended September 30,
2003 from $2.4 million for the same period in 2002. The increase was attributed
to higher employee-related costs of $342,000, a result of a higher average
sales and marketing headcount during the period, and increases in sales
commissions of $122,000, associated with additions to our installed base of
subscribers. Sales and marketing expenses increased to $8.3 million for the
nine months ended September 30, 2003 from $8.0 million for the same period in
2002. The increase resulted from increases in sales commissions of $429,000,
related to increased subscriber additions over the prior year, and increased
employee-related costs of $404,000, resulting from a higher average sales and
marketing headcount during the period. These increases were offset in part by
decreases in travel expenses of $178,000 and decreases in depreciation of
$174,000, as certain assets became fully depreciated. Sales and marketing
headcount decreased to 81 at September 30, 2003 from 83 at September 30, 2002.
We expect sales and marketing expenses to increase during the next twelve
months as we expand our sales and marketing efforts, including, but not limited
to, modest headcount growth and promotional expenses related to new product and
service offerings.

Research and development expenses

Research and development expenses consist of employee salaries and costs
related to development personnel and consultants, as well as expenses
associated with software and hardware development. Research and development
expenses decreased to $1.4 million for the three months ended September 30,
2003 from $1.5 million for the same period in 2002. This decrease was the
result of a $76,000 decline in depreciation expense as certain assets became
fully depreciated. Research and development headcount decreased to 57 at
September 30, 2003 from 61 at September 30, 2002. Research and development
expenses declined to $4.0 million for the nine months ended September 30, 2003
from $4.5 million for the same period in 2002. This decrease was the result of
a reduction in

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depreciation expense of $199,000, as certain assets became fully
depreciated, decreases in employee salaries and costs of $189,000, associated
with a reduction in average research and development headcount, and a decrease
of $155,000 in indirect allocated costs. We anticipate, however, that research
and development expenses will increase in future periods as we develop and
introduce new products and services, including modest increases in consultant
and employee-related expenses associated with those introductions.

General and administrative expenses

General and administrative expenses consist of employee salaries and
related expenses for executive and administrative costs, accounting and
professional fees, recruiting and the provision for doubtful accounts. General and
administrative expenses increased to $2.2 million for the three months ended
September 30, 2003 from $1.9 million for the same period in 2002. The increase
was the result of increases in professional fees of $140,000, higher
employee-related costs of $124,000, resulting from an increase in average
general and administrative headcount during the period, and increases in
general operating expenses such as insurance, subscriptions and bank fees of
$52,000. General and administrative expenses increased to $6.8 million for the
nine months ended September 30, 2003 from $6.7 million for the same period in
2002. The increase was due to professional fees of $274,000, increases in tax provisions related to estimated
sales and use tax liabilities of $200,000 and employee-related costs of $114,000. These increases were
offset by a decrease in the provision for doubtful accounts of $493,000.
General and administrative headcount increased to 51 at September 30, 2003 from
48 at September 30, 2002. We believe that general and administrative expenses,
other than the provision for doubtful accounts, will increase during the next
twelve months as we incur such expenses in anticipation of the growth of the
business and increased costs of operating as a public company.

Intangibles amortization

Intangibles amortization relates to the intangible assets, purchased
technology, that are being amortized over estimated useful lives of two to
three years.

Stock compensation expense

Deferred stock compensation related to stock option grants to employees
and consultants was $30,000 at September 30, 2003. Deferred stock compensation
is amortized on an accelerated basis over the vesting period of individual
awards. Amortization expense of deferred stock compensation decreased to
$154,000 from $380,000 and to $441,000 from $817,000 for the three and nine
months ended September 30, 2003 and 2002, respectively.

Interest income (expense), net

Interest income is composed primarily of interest income on cash, cash
equivalents and short-term investments and interest expense relates to the
short-term financing of insurance costs. Interest income net of interest
expense decreased to $151,000 from $202,000 and decreased to $436,000 from
$656,000 in the three and nine months ended September 30, 2003 and 2002,
respectively. The decreases resulted from lower interest rates on invested
balances.

Other income (expense), net

During the three and nine month periods ended September 30, 2003 and 2002,
other expense consisted primarily of net foreign currency exchange gains
related to our subsidiary in India.

Income taxes

Since inception, we have incurred net losses for federal and state tax
purposes. Except for minimum state income and franchise taxes, we have not
recognized any tax provision or benefit.

Net income (loss)

Net income (loss) increased to $1.1 million from $(2.8) million for the
three months ended September 30, 2003 and 2002, respectively. Net loss
decreased to $435,000 for the nine months ended September 30, 2003 from

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$12.2 million for the same period in 2002. Our operating costs increased
to $15.7 million from $14.3 million for the three months ended September 30,
2003 and 2002, respectively, and increased to $47.0 million from $43.3 million
for the nine months ended September 30, 2003 and 2002, respectively. The impact
of this increase in expenses was accompanied by an increase in revenues to
$16.6 million from $11.3 million for the three months ended September 30, 2003
and 2002, respectively, and an increase in revenues to $46.1 million from $31.5
million for the nine months ended September 30, 2003 and 2002, respectively.

We believe period-to-period comparisons of our operating results are not
necessarily meaningful. You should not rely on them to predict our future
performance. The amount and timing of our operating expenses may fluctuate
significantly in the future as a result of a variety of factors.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2003, we had $98.4 million of cash and cash
equivalents and $2.0 million of restricted short-term investments. We held no
available-for-sale securities at September 30, 2003.

We currently have a $2.0 million revolving line of credit facility against
which there were no borrowings as of September 30, 2003. The line, against
which letters of credit have been issued, is collateralized by a restricted
certificate of deposit of $2.0 million. There are two letters of credit
outstanding under this revolving line of credit at September 30, 2003 totaling
$734,000 and expiring October 29, 2003 and December 31, 2003. This credit
facility expires in November 2003.

Net cash provided by (used in) operating activities was $5.3 million and
$(6.1) million for the nine months ended September 30, 2003 and 2002,
respectively. This improvement in net cash provided by (used in) operating
activities was primarily attributed to net income, net of non-cash expenses and
charges (depreciation and amortization, loss on disposal of property and
equipment, amortization of deferred stock compensation, provision for inventory
reserves and provisions for doubtful accounts and sales returns) of $2.9
million for the nine months ended September 30, 2003 versus a net loss of $5.7
million on the same basis for the nine months ended September 30, 2002. Cash
provided by operating activities during the nine months ended September 30,
2003 also increased in comparison to the prior year period due to decreases in
accounts receivable and inventory. Improvements in accounts receivable
collections as compared to increases in customer billings also contributed to
increased operating cash flows in the nine months ended September 30, 2003
compared to the same period in the prior year.

At September 30, 2003 approximately $1.1 million of our gross accounts
receivable were over 90 days old. We believe we have adequately provided
allowances as of September 30, 2003 for any such amounts that may ultimately
become uncollectible. We defer product costs at time of shipment and expense
any amounts in excess of the related product revenue at that time. We record
accounts receivable from our customers and defer related product revenue upon
installation. Both deferred product cost and revenue are recognized ratably
over the minimum service contract period. Deferred product costs are recorded
at the time of shipment and deferred product revenue is recorded at the time of
installation. As a result, deferred product costs will generally exceed
deferred revenue as we continue to grow our business. At September 30, 2003,
total deferred product costs of $18.1 million exceeded total deferred revenue
by $2.5 million.

Net cash used in investing activities during the nine months ended
September 30, 2003 was $576,000 and primarily resulted from purchases of $1.1
million of property and equipment, offset in part by the sale of restricted
short-term investments and changes in other assets. Net cash used in
investing activities during the nine months ended September 30, 2002
was $580,000 and resulted from purchases of $445,000 of property and
equipment and changes in
other assets.

Net cash provided by financing activities was $58.0 million and $1.7
million for the nine months ended September 30, 2003 and 2002, respectively.
Cash provided was attributed to proceeds from the sale of common stock of $56.1
million and $1.2 million and proceeds from payments on notes receivable issued
to stockholders of $2.0 million and $554,000 for the nine months ended
September 30, 2003 and 2002, respectively.

We believe that our cash and cash equivalents will be sufficient to meet
our anticipated cash needs for operating expenses, working capital and capital
expenditures for at least the next eighteen months. If cash generated from
operations is insufficient to satisfy our liquidity requirements, we may seek
to obtain a larger credit facility or to sell additional equity or debt
securities, which may not be available on commercially reasonable terms or at
all, and which could dilute existing stockholders.

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RISK FACTORS

In addition to the other information contained in this Report, the
following factors should be carefully considered in evaluating our business and
prospects. The risks and uncertainties described below are intended to be ones
that are specific to us or our industry and that we deem material, but they are
not the only ones that we face.

Our quarterly operating results are subject to fluctuations, and our stock
price may decline if we do not meet the expectations of investors and analysts.

Our quarterly revenues and operating results are difficult to predict and may
fluctuate significantly from quarter to quarter due to a number of factors,
many of which are outside our control. These factors include, but are not
limited to:



| |  |  | changes in the market for mobile resource management services;                                                                            
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | delays in market acceptance or implementation by customers of our services;                                                               
|
| |  |  | changes in length of sales cycles of or demand by our customers for existing and additional
services;                                     
|
| |  |  | changes in the productivity of our distribution channels;                                                                                 
|
| |  |  | introduction of new services by us or our competitors;                                                                                    
|
| |  |  | changes in our pricing policies or those of our competitors or suppliers;                                                                 
|
| |  |  | changes in our mix of sources of revenues;                                                                                                
|
| |  |  | general economic and political conditions;                                                                                                
|
| |  |  | wireless networks, positioning systems and Internet infrastructure owned and controlled by others;
and                                    
|
| |  |  | any need to migrate to new wireless networks, which could cause our products to be incompatible
with new wireless networks or out of date.

Our expense levels are based, in part, on our expectation of future revenues.
Additionally, a substantial portion of our expenses is relatively fixed. As a
result, any shortfall in revenues relative to our expectations could cause
significant changes in our operating results from quarter to quarter. We
believe period-to-period comparisons of our revenue levels and operating
results are not meaningful. You should not rely on our quarterly revenues and
operating results to predict our future performance. In some future quarter our
operating results may be below the expectations of public market analysts and
investors and, as a result, the price of our common stock may fall.

If, pursuant to its announcement, AT&T Wireless ceases to operate its Cellular
Digital Packet Data network in 2004, we may lose subscribers and our revenues
could decrease.

Beginning March 31, 2003, AT&T Wireless discontinued new sales of Cellular
Digital Packet Data service. AT&T Wireless has also indicated that it expects
to cease operating its Cellular Digital Packet Data network by June 30, 2004.
If the termination of AT&T Wireless Cellular Digital Packet Data network
disrupts our ability to deliver services to certain of our customers, our
revenues would decrease and customer satisfaction would suffer.

If, pursuant to its announcement, Verizon Wireless ceases to operate its
Cellular Digital Packet Data network by the end of 2005, we may lose subscribers and our
revenues could decrease.

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Verizon Wireless has indicated that it expects to cease operating its Cellular
Digital Packet Data network by the end of 2005. If the termination of Verizon
Wireless Cellular Digital Packet Data network disrupts our ability to deliver
services to certain of our customers, our revenues would decrease and customer
satisfaction would suffer.

If wireless carriers on which we depend for service decide to abandon or do not
continue to expand their wireless networks, we may lose subscribers and our
revenues could decrease.

Currently our services function on General Packet Radio Services networks, Code
Division Multiple Access 1XRTT networks, Integrated Digital Enhanced Networks
and Cellular Digital Packet Data networks. These protocols cover only portions
of the United States and Canada, and may not gain widespread market acceptance.
If wireless carriers abandon these protocols in favor of other types of
wireless technology, we may not be able to provide services to our customers. In addition, if wireless carriers do not expand
their coverage areas, we will be unable to meet the needs of customers who wish
to use some of our services outside the current coverage area.

If one or more of the agreements we have with wireless carriers is terminated
and as a result we are unable to offer services to our customers within a
carriers coverage area, we may be unable to deliver our services, we may lose
subscribers, and our revenues could decrease.

Our existing agreements with wireless carriers may in some cases be terminated
upon as little as 15 days written notice or immediately upon the occurrence of
certain conditions. In connection with ceasing operation of their Cellular
Digital Packet Data networks, AT&T Wireless and/or Verizon Wireless may seek to
terminate or not to renew their contracts for Cellular Digital Packet Data
service with us. If one or more of our wireless carriers decides to terminate
or not to renew its contract with us, we may incur additional costs relating to
obtaining alternate coverage from another wireless carrier outside of its
primary coverage area, or we may be unable to replace the coverage at all,
causing a complete loss of services to our customers in that coverage area.

If our customers do not have access to sufficient capacity on reliable wireless
networks, we may be unable to deliver our services, we may lose subscribers,
and our revenues could decrease.

Our ability to grow and achieve profitability depends on the ability of
wireless carriers to provide sufficient network capacity, reliability and
security to our customers. Even where wireless carriers provide coverage to
entire metropolitan areas, there are occasional lapses in coverage, for example
due to tunnels blocking the transmission of data to and from wireless modems
used with our services. These effects could make our services less reliable and
less useful, and customer satisfaction could suffer.

We have historically incurred losses and we may incur losses in the future.

Other than for the three months ended September 30, 2003, we have not been
profitable. At September 30, 2003, we had an accumulated deficit of $118.3
million. To become profitable and sustain profitability, we will need to
generate significant revenues to offset our cost of revenues and our sales and
marketing, research and development and general and administrative expenses. We
may not achieve or sustain our revenue or profit goals and our losses may
increase in the future. To facilitate the sale of our services, we have sold
and may sell our hardware below our costs. As a result, we have experienced,
and may continue to experience, negative gross margins on the sale of our
hardware. Changes such as increases in our pricing for products and services or
the pricing of competing products and services may harm our ability to increase
sales of our products and services to new and existing customers. If we are not
able to expand our customer base and increase our revenue from new and existing
customers, we may be unprofitable.

Due to our limited operating history, it is difficult to predict future
operating results or our stock price.

An evaluation of our business is difficult because we have a limited operating
history. We commenced operations in July 1996 and commercially offered our
first services in the second half of 1998. We may not continue to achieve
profitability or continue to grow. We face a number of risks encountered by
companies in the mobile resource management market, including:



| |  |  | our need to respond to technological change and introduce reliable and robust products and
| | - |  | ------------------------------------------------------------------------------------------

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| |   |  | services that meet the demanding needs of customers;                                                                                      
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the uncertainty of market acceptance of our services;                                                                                     
|
| |  |  | our need to expand and manage the expansion of our marketing, sales and support organizations,
as well as our distribution channels;      
|
| |  |  | our ability to anticipate and respond to market competition;                                                                              
|
| |  |  | wireless networks, positioning systems and Internet infrastructure owned and controlled by
others; and                                    
|
| |  |  | any need to migrate to new wireless networks, which could cause our products to be
incompatible with new wireless networks or out of date.

We may not successfully address these risks, and our business strategy may not
be successful.

If we cannot deliver the features and functionality our customers demand, we
will be unable to retain or attract new customers.

Our success depends upon our ability to determine the features and
functionality our customers demand and to design and implement services that
meet their needs in an efficient manner. We cannot assure you that we can
successfully determine customer requirements or that our future services will
adequately satisfy customer demands. In addition, we may experience
difficulties that could delay or prevent the successful development,
introduction or marketing of new services and service enhancements. If we
cannot effectively deploy, maintain and enhance our services, our revenues may
decrease, we may not be able to recover our costs and our competitive position
may be harmed.

We have limited resources and may be unable to manage our anticipated growth in
operations.

If we fail to develop and maintain our services as we experience rapid growth,
demand for our services could decrease, which would result in a decrease in our
revenues. Our development and expansion have placed, and will continue to
place, significant strain on our managerial, operational and financial
resources. Due to the limited deployment of our services, we are unable to
assess our ability to grow the business and manage a substantially larger
number of customers and additional services.

We depend on a limited number of third parties to manufacture and supply
critical components for our products and services.

We rely on sole suppliers and manufacturers for a number of key components for
these products and do not have long-term agreements with any of these suppliers
or manufacturers. If these parties do not perform their obligations, or if they
cease to manufacture and supply components critical for our products and
services, we may be unable to find other suppliers or operate our business. We
cannot be sure that alternative sources for key components used in our
products, such as the Internet Location Manager and the Internet Data Terminal,
will be available when needed, or if available, that these components will be
available on commercially reasonable terms. Our sole suppliers and
manufacturers of key components include:



| |  |  | Orient Semiconductor Electronics, our sole manufacturer of Internet Location Managers;                                                                        
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Motorola, our sole supplier of wireless modems operable on Integrated Digital Enhanced
Networks and of microcontrollers for our Internet Location Manager; and
|
| |  |  | Taiwan Semiconductor Manufacturing Company, our sole manufacturer of our GPS digital
receiver chips.                                                          

If our agreements with these or other suppliers and manufacturers are
terminated or expire, if we are unable to obtain sufficient quantities of
components critical for our products and services, if the quality of these
components is

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inadequate, or if the terms for supply of these components become commercially
unreasonable, our search for additional or alternate suppliers and
manufacturers could result in significant delays, added expense and our
inability to maintain or expand our subscriber base. Any of these events could
require us to take unforeseen actions or devote additional resources to provide
our products and services and could harm our ability to compete effectively.

We may establish alliances or acquire technologies or companies in the future,
which could result in the dilution of our stockholders and disruption of our
business, which could reduce our revenues.

We are continually evaluating business alliances and external investments in
technologies related to our business. Acquisitions of companies, divisions of
companies, businesses or products and strategic alliances entail numerous
risks, any of which could materially harm our business in several ways,
including:



| |  |  | diversion of managements attention from our core business objectives and other
business concerns;                                
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | failure to integrate efficiently businesses or technologies acquired in the future with
our pre-existing business or technologies;
|
| |  |  | potential loss of key employees from either our pre-existing business or the acquired
business;                                   
|
| |  |  | dilution of our existing stockholders as a result of issuing equity securities; and                                               
|
| |  |  | assumption of liabilities of the acquired company.                                                                                

Some or all of these problems may result from current or future alliances,
acquisitions or investments. Furthermore, we may not realize any value from
these alliances, acquisitions or investments.

We face competition from internal development teams of potential customers and
from existing and potential competitors, which could limit our ability to
acquire subscribers and could reduce our market share and revenues.

The market for our services is competitive and is expected to become even more
competitive in the future. Our customers evaluate our services and those of our
competitors primarily on the basis of the functionality, ease of use, quality,
price, geographic coverage of services and corporate financial strength. As the
demand by businesses for mobile resource management services increases, the
quality, functionality and breadth of competing products and services will
likely improve and new competitors will likely enter our market. In addition,
the widespread adoption of industry standards may make it easier for new market
entrants or existing competitors to improve their existing services, to offer
some or all of the services we offer or may offer in the future, or to offer
new services that we do not offer. We also do not know to what extent network
infrastructure developers and wireless network operators will seek to provide
integrated wireless communications, Global Positioning System, software
applications, transaction processing and Internet solutions, including access
devices developed internally or through captive suppliers. If we are unable to
compete successfully, it may harm our business, which in turn may limit our
ability to acquire or retain subscribers, resulting in a loss of market share
and revenues. We face competition from a number of different business
productivity solutions, including:



| |  |  | solutions developed internally by our prospective customers information technology
staffs;                                                          
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | discrete means of communication with mobile workers, such as pagers, two-way radios,
handheld devices and wireless telephones;                       
|
| |  |  | solutions targeted at specific vertical markets, such as services offered by Qualcomm that
monitor assets in the long-haul transportation sector; and
|
| |  |  | solutions offered by smaller market entrants.                                                                                                        

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Many of our existing and potential competitors have substantially greater
financial, technical, marketing and distribution resources than we do.
Additionally, many of these companies have greater name recognition and more
established relationships with our target customers. Furthermore, these
competitors may be able to adopt more aggressive pricing policies and offer
customers more attractive terms than we can.

A disruption of our services due to accidental or intentional security breaches
may harm our reputation, cause a loss of revenues and increase our expenses.

Unauthorized access, computer viruses and other accidental or intentional
actions could disrupt our information systems or communications networks. We
expect to incur significant costs to protect against the threat of security
breaches and to alleviate problems caused by any breaches. Currently, the
wireless transmission of our customers proprietary information is not
protected by encryption technology. If a third party were to misappropriate our
customers proprietary information, we could be subject to claims, litigation
or other potential liabilities that could seriously harm our revenues and
result in the loss of customers.

System or network failures could reduce our sales, increase costs or result in
liability claims.

Any disruption to our services, information systems or communications networks
or those of third parties could result in the inability of our customers to
receive our services for an indeterminate period of time. Our operations depend
upon our ability to maintain and protect our computer systems at our co-located
data centers in Ashburn, Virginia and Redwood City, California, which is on or
near earthquake fault zones. Our services may not function properly if our
systems fail, or if there is an interruption in the supply of power, or if
there is an earthquake, fire, flood or other natural disaster, or an act of war
or terrorism. Within each of our data centers, we have fully redundant systems;
however, in the event of a system or network failure, the process of shifting
access to customer data from one data center to the other would be performed
manually, and could result in a further disruption to our services. Any
disruption to our services could cause us to lose customers or revenue, or face
litigation, customer service or repair work that would involve substantial
costs and distract management from operating our business.

We depend on Global Positioning System technology owned and controlled by
others. If we do not have continued access to GPS technology or satellites, we
will be unable to deliver our services and revenues will decrease.

Our services rely on signals from Global Positioning System satellites built
and maintained by the U.S. Department of Defense. GPS satellites and their
ground support systems are subject to electronic and mechanical failures and
sabotage. If one or more satellites malfunction, there could be a substantial
delay before they are repaired or replaced, if at all, and our services may
cease to function and customer satisfaction would suffer.

In addition, the U.S. government could decide not to continue to operate and
maintain GPS satellites over a long period of time or to charge for the use of
the Global Positioning System. Furthermore, because of ever-increasing
commercial applications of the Global Positioning System and international
political unrest, U.S. government agencies may become increasingly involved in
the administration or the regulation of the use of GPS signals in the future.
If factors such as the foregoing affect the Global Positioning System, for
example by affecting the availability, quality, accuracy or pricing of GPS
technology, our business will suffer.

Defects or errors in our services could result in the cancellation or delays of
our services, which would damage our reputation and harm our financial
condition.

We must develop our services quickly to keep pace with the rapidly changing MRM
market. Products and services that address this market are likely to contain
undetected errors or defects, especially when first introduced or when new
versions are introduced. Our services may not be free from errors or defects,
which could result in the cancellation or disruption of our services or
dissatisfaction of customers. This would damage our reputation and result in
lost revenues, diverted development resources, and increased service and
warranty costs.

The reporting of inaccurate location-relevant information could cause the loss
of customers and expose us to legal liability.

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The accurate reporting of location-relevant information is critical to our
customers businesses. If we fail to accurately report location-relevant
information, we could lose customers, our reputation and ability to attract new
customers could be harmed, and we could be exposed to legal liability. We may
not have insurance adequate to cover losses we may incur as a result of these
inaccuracies.

Our success and ability to compete depends upon our ability to secure and
protect patents, trademarks and other proprietary rights.

Our success depends on our ability to protect our proprietary rights to the
technologies used to implement and operate our services in the United States
and in foreign countries. In the event that a third party breaches the
confidentiality provisions or other obligations in one or more of our
agreements or misappropriates or infringes on our intellectual property or the
intellectual property licensed to us by third parties, our business would be
seriously harmed. To protect our proprietary rights, we rely on a combination
of trade secrets, confidentiality and other contractual provisions and
agreements, and patent, copyright and trademark laws, which afford us only
limited protection. Third parties may independently discover or invent
competing technologies or reverse engineer our trade secrets, software or other
technology. Furthermore, laws in some foreign countries may not protect our
proprietary rights to the same extent as the laws of the United States.
Therefore, the measures we take to protect our proprietary rights may not be
adequate.

Claims that we infringe third-party proprietary rights could result in
significant expenses or restrictions on our ability to provide our services.

Third parties may claim that our current or future products or services
infringe their proprietary rights or assert other claims against us. As the
number of entrants into our market increases, the possibility of an
intellectual property or other claim against us grows. Any intellectual
property or other claim, with or without merit, would be time-consuming and
expensive to litigate or settle and could divert management attention from
focusing on our core business. As a result of such a dispute, we may have to
pay damages, incur substantial legal fees, develop costly non-infringing
technology, if possible, or enter into license agreements, which may not be
available on terms acceptable to us, if at all. Any of these results would
increase our expenses and could decrease the functionality of our services,
which would make our services less attractive to our current or potential
customers. We have agreed in some of our agreements, and may agree in the
future, to indemnify other parties for any expenses or liabilities resulting
from claimed infringements of the proprietary rights of third parties.

From time to time, we are or may be subject to litigation that could result in
significant costs to us.

From time to time, we are or may be subject to litigation in the ordinary
course of business relating to any number or type of claims, including claims
for damages related to errors and malfunctions of our services or hardware
platforms or their deployment. A securities, product liability or other claim
could seriously harm our business because of the costs of defending the
lawsuit, diversion of employees time and attention, and potential damage to
our reputation. Some of our agreements with our customers, suppliers and other
third parties contain provisions designed to limit exposure to potential
claims. Limitation of liability provisions contained in our agreements may not
be enforceable under the laws of some jurisdictions. As a result, we could be
required to pay substantial amounts of damages in settlement or upon the
determination of any of these types of claims. Although we carry general
liability and directors and officers insurance, our insurance may not cover
potential claims or may not be adequate to cover all costs incurred in defense
of potential claims or to indemnify us for all liability that may be imposed.

Our success depends on our ability to maintain and expand our sales channels.

To increase our market awareness, customer base and revenues, we need to expand
our direct and indirect sales operations. There is strong competition for
qualified sales personnel, and we may not be able to attract and retain
sufficient new sales personnel to expand our operations. New sales personnel
require training and it takes time for them to achieve full productivity, if at
all. In addition, we believe that our success is dependent on expansion of our
indirect distribution channels, including our relationships with wireless
carriers, independent sales agents and distribution partners. To date, we have
relationships with wireless carriers, independent sales agents and a limited
number of distribution partners. These sales channel partners require training
in selling our products and services and it will take time for these partners
to achieve productivity, if at all. We may not be able to establish
relationships

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with additional distributors on a timely basis, or at all. Our distributors,
many of which are not engaged with us on an exclusive basis, may not devote
adequate resources to promoting and selling our services.

We depend on recruiting and retaining qualified personnel and our inability to
do so may cause a loss in sales, impair our ability to effectively manage our
operations or impair our ability to develop and support services and products.

Because of the technical nature of our services and the market in which we
compete, our success depends on the continued services of our current executive
officers and our ability to attract and retain qualified personnel with
expertise in wireless communications, Global Positioning Systems, hosted
software applications, transaction processing and the Internet. Competitors and
others have in the past, and may attempt in the future, to recruit our
employees. In addition, new employees generally require substantial training,
which requires significant resources and management attention. Even if we
invest significant resources to recruit, train and retain qualified personnel,
we may not be successful in our efforts.

Government regulations and standards could subject us to increased regulation,
increase our costs of operations or reduce our opportunities to earn revenue.

In addition to regulations applicable to businesses in general, we may also be
subject to direct regulation by U.S. governmental agencies, including the
Federal Communications Commission and Department of Defense. These regulations
may impose licensing requirements, privacy safeguards relating to certain
subscriber information, or safety standards, for example with respect to human
exposure to electromagnetic radiation and signal leakage. A number of
legislative and regulatory proposals under consideration by federal, state,
provincial, local and foreign governmental organizations may lead to laws or
regulations concerning various aspects of the Internet, wireless communications
and GPS technology, including on-line content, user privacy, taxation, access
charges and liability for third-party activities. Additionally, it is uncertain
how existing laws governing issues such as taxation on the use of wireless
networks, intellectual property, libel, user privacy and property ownership
will be applied to our services. The adoption of new laws or the application of
existing laws may expose us to significant liabilities and additional
operational requirements, which could decrease the demand for our services and
increase our cost of doing business. Wireless carriers who supply us with
airtime are subject to regulation by the Federal Communications Commission, and
regulations that affect them could also increase our costs or limit the
provision of our services.

Fluctuations in the value of foreign currencies could result in increased
product costs and operating expenses.

We have suppliers and manufacturers that are located outside the United States.
Some transactions relating to supply and development agreements may be
conducted in currencies other than the U.S. dollar, and fluctuations in the
value of foreign currencies relative to the U.S. dollar could cause us to incur
currency exchange costs. In addition, some of our transactions denominated in
U.S. dollars may be subject to currency exchange rate risk. We cannot predict
the effect of exchange rate fluctuations on our future operating results.
Should there be a sustained increase in average exchange rates for the local
currencies in these countries, our suppliers and manufacturers may request a
price increase at the end of the contract period.

Geopolitical, economic and military conditions, including terrorist attacks and
other acts of war, may materially and adversely affect the markets on which our
common stock trades, the markets in which we operate, our operations and our
profitability.

Terrorist attacks and other acts of war, and any response to them, may lead to
armed hostilities and such developments would likely cause instability in
financial markets. Armed hostilities and terrorism may directly impact our
facilities, personnel and operations which are located in the United States and
India, as well as those of our clients. Furthermore, severe terrorist attacks
or acts of war may result in temporary halts of commercial activity in the
affected regions, and may result in reduced demand for our products. These
developments could have a material adverse effect on our business and the
trading price of our common stock.

Our stock price is volatile, which may cause you to lose money and could lead
to costly litigation against us that could divert our resources.

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Stock markets have recently experienced dramatic price and volume fluctuations,
particularly for shares of technology companies. These fluctuations can be
unrelated to the operating performance of these companies. Broad market
fluctuations may reduce the market price of our common stock and cause you to
lose some or all of your investment. These fluctuations may be exaggerated if
the trading volume of our common stock is low. In addition, due to the
technology-intensive nature and growth rate of our business and the mobile
resource management market, the market price of our common stock may rise and
fall in response to:



| |  |  | quarterly variations in operating results;                                                             
| | - |  | -------------------------------------------------------------------------------------------------------
|
| |  |  | failure to achieve operating results anticipated by securities analysts and investors;                 
|
| |  |  | changes in estimates of our financial performance or changes in recommendations by securities analysts;
|
| |  |  | announcements of technological or competitive developments;                                            
|
| |  |  | the gain or loss of a significant customer or order;                                                   
|
| |  |  | disposition of shares of our common stock held by large investors; and                                 
|
| |  |  | acquisitions or strategic alliances by us or our competitors.                                          

When the market price of a companys stock drops significantly, stockholders
often institute securities class action lawsuits against that company. A
lawsuit against us could cause us to incur substantial costs and could divert
the time and attention of our management and other resources from our business.

As of November 3, 2003, a
limited number of stockholders own approximately 35.4%
of our stock and may act, or
prevent certain types of corporate actions, to the detriment of other
stockholders.

Our directors, officers and greater
than 5% stockholders own, as of November 3,
2003, approximately 35.4% of our outstanding common stock. Accordingly, these
stockholders may, if they act together, exercise significant influence over all
matters requiring stockholder approval, including the election of a majority of
the directors and the determination of significant corporate actions. This
concentration could also have the effect of delaying or preventing a change in
control that could otherwise be beneficial to our stockholders.

Our certificate of incorporation and bylaws and state law contain provisions
that could discourage a takeover.

We have adopted a certificate of incorporation and bylaws, which in addition to
state law, may discourage, delay or prevent a merger or acquisition that a
stockholder may consider favorable. These provisions include the following:



| |  |  | establishing a classified board in which only a portion of the total board members will be
elected at each annual meeting;                                                            
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | authorizing the board to issue preferred stock;                                                                                                                                       
|
| |  |  | prohibiting cumulative voting in the election of directors;                                                                                                                           
|
| |  |  | limiting the persons who may call special meetings of stockholders;                                                                                                                   
|
| |  |  | prohibiting stockholder action by written consent; and                                                                                                                                
|
| |  |  | establishing advance notice requirements for nominations for election to the board of
directors or for proposing matters that can be acted on by stockholders at stockholder
meetings.

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We have adopted a certificate of incorporation that permits our board to issue
shares of preferred stock without stockholder approval, which means that our
board could issue shares with special voting rights or other provisions that
could deter a takeover. In addition to delaying or preventing an acquisition,
the issuance of a substantial number of shares of preferred stock could
adversely affect the price of our common stock and dilute existing
stockholders.




Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Foreign Currency Exchange

We transact business primarily in U.S. dollars. We are subject, however,
to adverse movements in foreign currency exchange rates in those countries
where we conduct business. To date, the effect of fluctuations in foreign
currency exchange rates on expenses has not been material. Operating expenses
incurred by our subsidiary in India are denominated in Indian rupees. This
subsidiary was formed in November 1999 and provides research and development
and customer service activities. We hold fixed-price agreements denominated in
U.S. dollars with certain foreign-based suppliers: Orient Semiconductor
Electronics, in Taiwan, manufactures the Internet Location Manager;
Sierra Wireless, in
Canada, provides a modem for the Internet Location Manager; Taiwan
Semiconductor Manufacturing Company, in Taiwan, manufactures our Global
Positioning System receiver chips; and Micronet, in Israel, supplies our
Internet Data Terminal. Should there be a sustained increase in average
exchange rates for the local currency in any of the foregoing countries, our
suppliers may request increased pricing on any new agreements. If this were to
occur for all of these currencies and with each of these suppliers, a 10
percent increase in average exchange rates could increase our product costs by
approximately 1 percent.

We do not use derivative financial instruments for speculative trading
purposes, nor do we currently hedge any foreign currency exposure to offset the
effects of changes in foreign exchange rates. Similarly, we do not use
financial instruments to hedge operating expenses of our subsidiary in India.




Item 4. Controls and Procedures.

Within 90 days prior to the date of this Report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer, of
the effectiveness of our disclosure controls and procedures as defined in Rules
13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934 (the Exchange
Act). Based upon that evaluation, our principal executive officer and
principal financial officer have concluded that our disclosure controls and
procedures are effective. Our disclosure controls and procedures are designed
to provide a reasonable level of assurance of reaching our desired disclosure
control objectives and are effective in doing so.

There were no significant changes in our internal controls or in other
factors that could significantly affect these internal controls subsequent to
the date of their evaluation.




PART II. OTHER INFORMATION




Item 1. Legal Proceedings.

From time to time, we are subject to claims in legal proceedings arising
in the normal course of our business. We do not believe that we are party to
any pending legal action that could reasonably be expected to have a material
adverse effect on our business, financial condition or operating results.

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Item 4. Submission of Matters to a Vote of Security Holders.

None.




Item 5. Other Information.

In the
third quarter of 2003, we completed a public offering of 4,000,000
shares of newly issued common stock, and an additional 2,500,000
shares of common stock from certain selling stockholders, at a public
offering price of $14.00 per share. We received from the offering,
after underwriting discounts and selling expenses, net proceeds of
approximately $51.9 million. We intend to use the net proceeds
for capital expenditures, working capital and other general corporate
purposes. We may use a portion of the net proceeds to acquire
complementary products, technologies or businesses. The managing
underwriters for the offering were UBS Securities LLC,
U.S. Bancorp Piper Jaffray, Inc., Needham & Company,
Inc. and Raymond James & Associates, Inc.




Item 6. Exhibits and Reports on Form 8-K.



| | (a) |  | Exhibits
| | --- |  | --------

|     |  |                                        
|---- |  | ---------------------------------------
|31.1 |  | Rule 13a-14(a)/15d-14(a) Certification.
|31.2 |  | Rule 13a-14(a)/15d-14(a) Certification.
|32.1 |  | Section 1350 Certification.            
|32.2 |  | Section 1350 Certification.            



| | (b) |  | The Company filed the following reports on Form 8-K during the three months ended
September 30, 2003:
| | --- |  | -----------------------------------------------------------------------------------------------------



| |  |  | A current report on Form 8-K was filed on July 3, 2003 pursuant to Item 5 (Other
Events and Regulation FD Disclosure) and Item 7 (Financial Statements, Pro Forma
Financial Information and Exhibits).                                
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | A current report on Form 8-K was filed on July 3, 2003 pursuant to Item 5 (Other
Events and Regulation FD Disclosure) and Item 7 (Financial Statements, Pro FormaFinancial Information
and Exhibits).                                 
|
| |  |  | A current report on Form 8-K was filed on July 24, 2003 pursuant to Item 7 (Financial
Statements, Pro FormaFinancial Information and Exhibits) and Item 9 (Regulation FD
Disclosure), as amended on Form 8-K/A filed on July 28, 2003.
|
| |  |  | A current report on Form 8-K was filed on August 20, 2003 pursuant to Item
7 (Financial Statements, Pro FormaFinancial Information and Exhibits) and Item 9 (Regulation FD Disclosure).                                               
|
| |  |  | A current report on Form 8-K was filed on September 4, 2003 pursuant to Item
7 (Financial Statements, Pro FormaFinancial Information and Exhibits) and Item 9 (Regulation FD Disclosure).                                             

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

AT ROAD, INC.

By: /s/ Thomas C. Hoster

Thomas C. Hoster
Chief Financial Officer
(Principal Financial and Accounting Officer)

Date: November 14, 2003

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Exhibit Index

|         |  |                                        
|-------- |  | ---------------------------------------
|Exhibits |  |                                        
|        
|31.1     |  | Rule 13a-14(a)/15d-14(a) Certification.
|31.2     |  | Rule 13a-14(a)/15d-14(a) Certification.
|32.1     |  | Section 1350 Certification.            
|32.2     |  | Section 1350 Certification.            

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